Norway's Socialist Party backs down from threat to LNG electricity project

By Nora Buli

OSLO, Feb 4 (Reuters) - Norway's Socialist Party has withdrawn its support for a proposal to block Equinor's Hammerfest liquefied natural gas plant from receiving a planned onshore power connection, clearing the way for the grid development to proceed.

Parliament is due on Thursday to vote on an opposition proposal seeking to revoke the LNG plant's planned link to the power grid, but the motion is likely to fail without backing from the Socialist Party.

The government approved the connection in 2023 to cut greenhouse gas emissions at the plant on Melkoeya island off Hammerfest and extend its lifetime.

Critics say hooking up the currently gas-driven plant to the regional grid could deprive other companies of electricity, push up local prices and harm the interests of Sami Indigenous reindeer herders.

The far-left Red Party had tabled a motion to kill the plan, seeking to instruct the minority Labour government to "facilitate the release of the power allocated to the electrification project on Melkoeya" by grid operator Statnett.

Several political parties, including the right-wing Progress, had signalled they would back the proposal in recent weeks, putting it on course for approval.

The Socialist Party said on Wednesday it remained opposed to the project but was withdrawing its support for the motion because it was "in practice unlawful".

Earlier on Wednesday, Equinor EQNR.OL CEO Anders Opedal warned that the motion would have repercussions far beyond Hammerfest.

"This creates uncertainty for everyone who works on and with Melkoeya, but also for everyone who makes investments based on agreements in Norway and for Europe that needs the energy," Opedal said.

The plant is owned by Equinor, Petoro, TotalEnergies TTEF.PA, Vaar Energi VAR.OL and Harbour Energy HBR.L and accounts for 5% of Norway's gas exports.