Prices of Norwegian gas exports are likely to rise slightly this year amid strong demand, but will fall back in 2019 as liquefied natural gas (LNG) deliveries in Europe are expected to increase, the government said in its revised budget on Tuesday.
Europe's largest gas supplier after Russia forecast gas export prices would rise by 0.1 crowns per standard cubic metres (sm3) to average 1.8 crowns (22.43 U.S. cents) this year, due to longer-than-usual cold weather across Europe.
High coal prices, reduced gas storage capacity in Europe and low access to hydro and nuclear power were also driving prices up, it said.
Next year though, Europe is expected to receive more LNG, competing with Norway's piped gas, the government said.
"Next year, increased access to liquefied natural gas is expected in Europe to contribute to a decline in gas prices to just under 1.5 Norwegian crowns per sm3," the government said in its revised budget.
Over the long term, export prices are expected to rebound to 1.9 crowns/sm3, it said, without saying what would drive the rebound.
After falling for four consecutive years from 2013 to 2016, Norway's gas export price recovered to an average 1.7 crowns/sm3 last year.
(Reporting by Lefteris Karagiannopoulos; Editing by Susan Fenton)