Liberalisation of the gas market

With a number of buyers able to bid against each other, gas can be traded in daily, monthly or yearly contracts. The sales contract between the Frigg licensees and British Gas was cancelled in 1997 by the buyer, and gas from the field could be sold on the spot market to other customers from 1998.[REMOVE]Fotnote: Interview with Kåre Tjønneland

Under the original agreement, British Gas had the right and obligation to buy all the Frigg gas. Elf received a higher price through spot sales than under the earlier contract, which meant that Frigg’s producing life could be extended. Uncertainties over output in the final phase meant that the only contracts concluded were those with binding periods of no more than six months.

This strategy of short-term contracts permitted volume to be adjusted in line with semi-annual logging of the wells. If output exceeded a critical rate, recovery of the remaining reserves would be hit. This was because the water contact in the reservoir would rise and have a substantial impact on Frigg’s production potential. A programme intended to optimise production and recovery was accordingly implemented. This involved frequent measurements of the fluid level in the reservoir and regular well testing.