Statoil plans Europe's first LNG project to produce Barents field

Plans to develop the first offshore gas field in the Barents Sea and with it Europe's first LNG project are to be revived. Statoil and its partners in Snøhvit gas field are expected to approve a new series of proposals next week, only 2 months after a deciding not to submit a plan for development and operation.

Sept. 21, 2001

2 min read

David Young
OGJ Online

LONDON, Sept. 21 -- Plans to develop the first offshore gas field in the Barents Sea and with it Europe's first LNG project are to be revived.

Statoil and its partners in Snøhvit gas field are considering a new series of proposals that are expected to be approved next week.

The anticipated go-ahead for the development comes only 2 months after the partners decided not to submit a plan for development and operation (PDO).

At that time, taxation issues had to be resolved with the Norwegian Finance Ministry and there were emissions issues pending with the Environment Ministry.

The project was first considered in 1997 and since then discussions on gas sales contracts have been ongoing. Statoil project director Egil Gjesteland said that the partners are considering new proposals put to them in the past 2 days and will decide next week. Statoil hopes then to be in a position to take its PDO to the Norwegian government.

The government has a 30% direct financial interest in the project. Statoil, as operator, has 22.29%, TotalFinaElf 18.4%, Gaz de France 12%, Norsk Hydro AS10%, Amerada Hess Norge AS 3.26%, RWE DEA Norge AS 2.81%, and Svenska Petroleum Exploration AS 1.24%.

The project will involve an investment of 46 billion kroner, including 15 billion for the land-based facilities and 5 billion for a fleet of dedicated LNG carriers.

Snøhvit is on Block 7121 off the far northwestern Norwegian coast, which also contains the smaller Albatross and Askeladden associated fields. It has estimated reserves of 318 billion cu m of gas, with small oil reserves that are at present considered uneconomic. Statoil acquired operatorship of the two smaller fields following an asset-swap with Norsk Hydro, after it had been considered that the demanding nature of the project would be best handled by one operator. Gas would be piped from subseas installations to an LNG terminal, which will be built at Melkopya near Hammerfest, with associated export facilities.

A preliminary contract worth 65 million kroner for engineering work on the LNG plant has been awarded to Linde of Germany. The contract includes two options for Linde to continue work up to the planned completion date of mid-2006. Plans for the required subsea pipelines connecting Snøhvit field to the land terminal are likely to be included in the POD.