Equinor's Massive Gas Pact: Long-Term Deal With Germany's SEFE, Plus Hydrogen Partnership

Equinor ASA EQNR penned a long-term gas sales agreement with Germany's state-owned energy company SEFE (Securing Energy for Europe).

The contract value is EUR 50 billion ($55 billion), as per Reuters.

"This is a response to Europe's need for long-term, reliable supply of energy and a viable route to decarbonization at scale," said Equinor's CEO Anders Opedal.

As per the terms, Equinor will supply SEFE with 111 terrawatt hours (ca 10 billion cubic meters - bcm) of natural gas annually from January 1, 2024, until 2034

The contract also includes an option to increase for another five years for a total of 319 TWh (around 29 bcm) over the period, at terms reflecting market prices.

The companies also inked a non-binding letter of intent (LoI), as per which SEFE will become a long-term off-taker of giga-scale, low-carbon hydrogen supplies from Equinor starting in 2029 till 2060.

"The procurement of natural gas from the Norwegian continental shelf ensures the sustainable and future-proof supply for European and, in particular, German customers in the household and industrial sectors," said Dr Egbert Laege, CEO of SEFE.

In October, Equinor reported Q3 FY23 adjusted revenue and other income decline of 41% Y/Y to $25.74 billion and updated its FY23 outlook. 

Price Action: EQNR shares are trading lower by 1.04% at $31.38 premarket on the last check Tuesday.

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