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Statoil CEO sees signs of gas demand recovery in Europe

* Gas demand for power generation rises in UK

* Statoil (Xetra: 675213 - news) sees appetite for long-term contracts

* Norway needs predictable gas demand in Europe (Adds further details)

By Stine Jacobsen

TROLL A PLATFORM, North Sea, June 2 (Reuters) - Norwegian energy firm Statoil sees some signs of gas demand in Europe recovering after years of decline, particularly in Britain, its chief executive told Reuters on Tuesday.

Norway overtook Russia as Western Europe's main gas supplier in the last quarter of 2014 and was also ahead in the first quarter of this year, industry data showed.

"For some years we have seen a reduction in the European gas consumption starting with the financial crisis, with coal substituting gas in the power generation segment and that has been a very disappointing development for us," Statoil CEO Eldar Saetre said.

"There are some positive signs that hopefully will at some point be a turning point for gas," he added, referring to carbon tax introduction in Britain, which has led to gas demand rising in the power sector last year after three years of decline.

Saetre was speaking during a visit to Statoil's Troll A platform in the North Sea with Miguel Arias Canete, European commissioner for climate and energy.

The platform, standing firmly on four huge concrete legs extending some 300 metres to the seabed, is the tallest such structure ever transported.

Norway's biggest gas field Troll alone produces about 30 percent of gas output from the Norwegian continental shelf, enough to meet Spain's annual demand.


Gas demand for power generation in Britain rose last year for the first time since 2010, data from UK's Department of Energy and Climate Change showed.

"I can't comment on whether a shift has happened for Norwegian gas, but... we see growing interest for more longer-term commitments on gas in many parts of Europe," Saetre said.

Statoil expanded the scope of its long-term gas supply contract with Britain's SSE (LSE: SSE.L - news) on Monday, after agreeing to supply more gas to rival Centrica (LSE: CNA.L - news) in May.

Norway's exports to the EU totalled 29.2 bcm in the first three months of the year against 27.2 bcm Russian supplies, Reuters calculations showed.

Russia remained EU's main gas supplier for 2014 as a whole.

European buyers held off purchases of Russian gas during the last two quarters, expecting its oil-indexed prices to catch up with last year's fall in crude oil.

Canete said that while Russia and Norway were to remain the EU's main gas suppliers, the Commission wants to increase competition from other sources, including imports of liquefied natural gas (LNG).

"We will launch an LNG strategy in December and in that framework we will make our forecast for gas consumption," Canete said. Currently about 80 percent of the EU's LNG import capacity is idle.

Norway could explore for more gas, but needed a more predictable long-term climate policy, which would favour gas over coal, Statoil officials said.

"We need signals from Europe that gas remains important in the future energy mix," said Oeivind Dahl-Stamnes, Statoil's vice president for Troll operations. (Reporting by Stine Jacobsen; Writing by Nerijus Adomaitis)

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