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Shell considers withdrawal from Norwegian offshore wind

4C Offshore | Chloe Emanuel
By: Chloe Emanuel 15/02/2024 Reuters

Energy major Shell (SHEL.L) is contemplating the possibility of withdrawing from the ongoing tender for Norway's inaugural commercial offshore wind farm, Reuters announced, citing concerns over the project's profitability, as stated by the company's country manager.

Shell, in collaboration with two local Norwegian utilities, is part of a consortium that has applied for pre-qualification to construct Norway's first bottom-fixed offshore wind farm at Soerlige Nordsjoe II in the North Sea.

Despite being in the pre-qualification phase, the business case for the project is currently "not looking great," according to Shell's Norway country manager, Marianne Olsnes. She expressed these reservations during a panel discussion at an energy conference in Oslo on Wednesday.

While no final decision has been made, Olsnes highlighted that the tender conditions were "very challenging," particularly as energy companies were tasked with handling certain aspects traditionally managed by grid operators.

Moreover, delivering power to a market uninterested in higher-cost electricity further compounds the challenges faced.
"We might not bid," Olsnes asserted, emphasizing the uncertainties surrounding Shell's continued participation in the tender.

The tender offers the opportunity to construct bottom-fixed wind turbines with a capacity of 1.5 GW, marking Norway's entry into large-scale offshore power developments anticipated to extend until 2040. Despite a subsidy offer of 23 billion Norwegian crowns ($2.17 billion), industry representatives and lobby groups continue to question its adequacy.

Acknowledging the global offshore wind industry's struggles with inflation, interest rate hikes, and increased supply chain costs, Olsnes did not rule out the possibility that Shell might still express interest in a planned floating wind tender or future offshore wind auctions.

($1 = 10.5869 Norwegian crowns)

It is noteworthy that Reuters is the original source of this announcement.

For more information about offshore wind farm projects across the globe, click here.


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