– We went in to win – E24

Equinor lost out to Ventyr in Norway’s first offshore wind auction, but Equinor CEO Anders Opedal emphasizes that profitability is most important. – We are disciplined.

In March, Norway held its first auction to develop a large-scale wind power plant on the Norwegian continental shelf.

Equinor participated in the auction, but had to lose out to Ventyr, which is owned by Japanese Jera through Parkwind, as well as the company Ingka, which runs many of Ikea’s stores.

This is not the first time that Equinor has come out of an offshore wind auction without areas. During Equinor’s quarterly presentation on Thursday, E24 asked why Equinor is so cautious about the bids.

– We have said very clearly that we will build one profitable renewable division. We have said that over time, and we have shown in practice that this is exactly what we do, says Equinor CEO Anders Opedal.

– We are disciplined.

He believes that the auction format is designed to “get a bit involved and bid”, but that Equinor has a good overview of costs and future income, and sets a clear limit for itself.

– Then we decide on a bid that will create good, profitable business if we win. And so we stand there, even though it can often be tempting to do something else. We are disciplined and stand there, says Opedal.

– Went in to win

– Is it a defeat that Equinor is not involved in paving the way for offshore wind on the Norwegian continental shelf in the first auction?

– We went in to win. Now we can only congratulate those who took this. Then we can continue working, he says.

– There are many opportunities, the Norwegian shelf is an investment area, both for oil and gas and offshore wind. I am quite sure, with the good organization I have, that we will achieve this, says Opedal.

– Has it been recorded that Equinor’s green plans were met with skepticism on capital market day?

– We have been very consistent. When it comes to oil and gas, we said in 2021 that we would drill 20-30 exploration wells, and we said this year that this is the number. We said we’re going to build a profitable renewables business, and that’s exactly what we’re doing. We are capital disciplined, as we have said all along, Opedal says.

– So we follow the plan we have, and then we have to accept that there are increased costs and increased competition, and find our way so that we can deliver energy that the world needs while at the same time building up new, profitable value chains.

Bet on

Although Equinor has not wanted to bid up enough to win some of the most expensive areas, the company has a number of offshore wind projects in its portfolio:

A fifth of Equinor’s investments last year went to renewable energy and low-carbon initiatives. This is to be increased to half of the investments by 2030, including loan financing.

The criticism has been that profitability is better in oil and gas. If the oil price remains at USD 75 a barrel, Equinor expects that new oil projects over the next ten years will yield an average return of 30 percent.

For renewables, the company’s target is a return of 4–8 per cent.

Equinor nevertheless expects to bring in over NOK 20 billion in cash annually from renewable energy alone from 2030, and believes this could be a “significant store” for the company.

– The reality as of today is that oil and gas are much more profitable. But it is not comparing apples and apples, because the risk profile is very different, Equinor’s renewables manager Pål Eitrheim told E24 earlier this year.

– Something we are familiar with

Recently, there have been concerns in the offshore wind industry. Increased costs and capacity challenges resulting in long delivery times could potentially threaten Europe’s offshore wind targets.

– There have been bottlenecks in deliveries of turbines and cables. Could it threaten the great ambitions we see in many countries?

– Challenges in supply chains are something we are familiar with. I have worked 32 years in this business, and there are always fluctuations, says Opedal.

– This can mean that things can go slower, but sometimes also a little faster. We just have to make sure we are in sync with the markets and the cost level.

Equinor and formerly Statoil are not unfamiliar with challenges in supply chains. After a boom from 2011 to 2014, costs were so high that the company was dependent on an oil price of $100 a barrel.

Eventually, a series of cost-saving measures meant that the company was only dependent on a price of 50 dollars a barrel.