Statfjord Late Life to UK

Statoil has resolved to send its share of rich gas from the Statfjord late life project in the North Sea to the UK, utilizing the Flags pipeline system to St Fergus in Scotland.

The late phase development involves terminating gas injection on the Statfjord field and reducing pressure in the reservoir.

Statoil's choice of the British option follows an attractive offer for transporting and processing its gas from Shell and ExxonMobil, which own Flags.

The natural gas will be delivered to the UK market, after the natural gas liquids propane and naphtha have been separated at the St Fergus terminal for transport to customers. Under a swap agreement, Statoil will take over volumes in Norway from Shell and ExxonMobil corresponding to the Statfjord NGL which goes to Scotland.

These transfers will take place at the Karsto treatment complex north of Stavanger and the Mongstad refinery near Bergen.

"This agreement is conditional on satisfactory profitability being established for Statfjord late life," says Oyvind Kirkhus, manager for new infrastructure in the Natural Gas business area.

The Statfjord licensees are expected to take an investment decision in late 2004-early 2005 before submitting a revised plan for development and operation (PDO) to the authorities.

"Opting for St Fergus as the gas landfall will strengthen our position as a reliable supplier of gas to the UK market," says Mr. Kirkhus.

He emphasizes that it also opens the way to taking gas to Karsto from additional fields in the Halten-Nordland area of the Norwegian Sea.

Plans call for gas exports in the late life project to start on October 1, 2007.

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