Statoil, Norway unable to agree on Snøhvit development in Barents Sea

Operator Statoil and its partners in Snøhvit and associated fields off Norway have decided not to submit their 40 billion kroner [$4.3 billion] development plans to the government. Snøhvit would have been the first petroleum development in the Barents Sea.


By the OGJ Online Staff

HOUSTON, July 23 -- Operator Statoil AS and its partners in the Snøhvit and associated fields off Norway have decided not to submit their proposed 40 billion kroner [$4.3 billion] development plans to the government.

Snøhvit would have been the first petroleum development in the Barents Sea.

Discovered in 1984, Snøhvit is on blocks 7120/6, 7121/4, and 7121/5 in up to 340 m of water. Gas reserves are 5.3 tcf, but because the field is so far from markets, production would have been moved as liquefied natural gas.

Statoil said, "This decision by the management committee reflects lack of clarification over government terms relating to the division of revenues and taxes between offshore and land-based facilities."

The partners had planned to submit development and operation plans and installation and operation plans this summer covering Snøhvit, Askeladd, and Albatross fields.

"Snøhvit demands the early investment of roughly 40 billion kroner, while revenues will be earned over 25 years," said project director Snorre Jensen. "It's accordingly been important for the license to clarify framework conditions before reaching a decision on development and operation."

Statoil said it would continue to negotiate with Norwegian authorities.

Plans were to begin producing the Snøhvit complex in late 2005 or early 2006. Subsea installations would be linked by pipeline to a gas treatment plant near Hammerfest in northern Norway.

The Snøhvit project was reactivated at the beginning of 1997 to assess development of the three fields (OGJ, Oct. 21, 1996, p 22.)

It would have included platforms, a pipeline to land, receiving facilities, and a liquefaction plant to produce LNG. The 40 billion kroner cost would include 15 billion kroner for land-based facilities and 5 billion for LNG carriers.

Statoil has 22.29% of the project, Petoro (formerly the state's direct financial interest) 30%, TotalFinaElf SA 18.4%, Gaz de France SA 12%, Norsk Hydro AS 10%, Amerada Hess International Ltd. 3.26%, RWE-DEA AG 2.81%, and Svenska Petroleum Exploration AB 1.24%.

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