Skanled partners place gas pipeline plans on hold

The Skanled partners have suspended the pipeline project that was to deliver Norwegian gas to Sweden and Denmark because of the global economic uncertainty and increased commercial risk.

Uchenna Izundu
OGJ International Editor

LONDON, May 1 -- The Skanled partners have suspended the pipeline project that was to deliver Norwegian gas to Sweden and Denmark because of the global economic uncertainty and increased commercial risk.

The pipeline was scheduled to start operations in 2012 and Gassco AS, the leader of the consortium, said it was unclear on what future gas demand would be.

"Despite strong efforts by many stakeholders to succeed with the project, it is Gassco's view that the current economic environment and also subsequent uncertainties related to timing of new field developments on the Norwegian Continental Shelf, have weakened the basis for the project," said Thor Otto Lohne, Gassco executive vice-president.

"The project might be relaunched if the commercial conditions become more favourable in the future," Lohne said.

It has been difficult for the partners to secure gas volumes to underpin the project as the shippers have not been able to reach the gas sales agreements. They planned to submit installation and operation plans to the authorities in April.

Skanled, which will cost an estimated 10 billion kroner was interdependent on receiving terminals in Norway, Sweden, and Denmark. The pipeline's capacity was 24 million standard cu m/day (OGJ Online, Jan. 17, 2009).

In January Gassco announced plans to abandon a separation plant for natural gas liquids in the Grenland area of southeast Norway because Ineos, a privately owned UK group and potential customer of the pipeline, had delayed expansion of its cracker in the Rafnes region in Grenland due to changing market conditions.

Poland had expressed an interest in the pipeline being extended to its territory to help diversify its gas supplies from Russia.

Contact Uchenna Izundu at uchennai@pennwell.com.

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