Ineos wants to develop oil and gas project in Denmark

Petrochemicals group Ineos is set to develop an oil and gas field in Denmark after the country approved such a project for the first time in years.

The British group's announcement on Friday comes against the background of the European energy crisis, which requires a search for alternatives to Russian gas. It also signals a policy shift in Denmark, which had moved away from fossil fuels.

Ineos, together with its partners Danoil and Nordsøfonden, will develop the Solsort West field in the North Sea, with first oil and gas production expected in the fourth quarter of 2023. Gas production from the field will cover 10 percent of Danish consumption, according to Ineos.

In approving the development this week, the Danish Energy Agency said the Solsort field is expected to account for 12 percent of Denmark's oil production and 5 percent of gas production in 2024.

Mads Weng Gade, head of Ineos Energy DK, said the project is "the first Danish oil and gas development in many years" and will "make a valuable contribution to Danish and European energy independence and self-sufficiency at a difficult time for Europe".

But Tom Marzec-Manser, head of gas analysis at consultancy ICIS, doubted the project would have a significant impact on European supplies.

"Denmark consumes about 2 billion cubic meters of gas annually. Based on Ineos data, this indicates that Solsort production will not exceed 1.0 million cubic meters per day," he said.

"Before the war, Russia was supplying 165 million cubic meters per day via Nord Stream 1, and European winter demand can be over 2 billion cubic meters per day at the high end," he said.

He added that the development of Ineos "will in no way structurally change the balance between gas supply and demand in Europe".

Denmark began producing oil and later gas in the North Sea in 1972, with tax revenues being a cornerstone of building and maintaining the Danish welfare state, but production has been declining for years. According to the Danish Energy Agency, production peaked in 2004 for oil and 2005 for gas.

The country's largest gas field, Tyra, has been under rehabilitation since late 2019, and production is not expected to resume until 2023. The country became a net importer of oil in 2018.

Denmark has emerged as one of the world's leading countries in climate diplomacy. At the COP26 climate summit last year, the country formed a multinational group with Costa Rica to end oil and gas production. It also decided to end all new oil and gas production in the North Sea by 2020.