Norway To Ramp Up Gas Production Capacity, Eyes Arctic Pipeline


OSLO, April 5 (Reuters) - Norway plans to increase its gas production capacity and is evaluating the potential for building a pipeline from the Barents Sea to meet future demand in Europe, its gas system operator Gassco said on Tuesday.

Norway meets about 25 percent of Europe's gas needs, competing with Russia for top place, and demand from the European region is expected to rise over the next 20 years due to policies to mitigate climate change.

EU gas consumption rose in 2015 for the first time in four years, business association Eurogas has said.

Norway's oil and gas company Statoil said separately on Tuesday that the government has granted it permission to increase output from the Troll gas field to 33 billion cubic metres for a year from Oct. 1.

Troll, the country's biggest field, accounts for about 30 percent of gas output from the Norwegian continental shelf (NCS).

Gassco said in its annual report published on Tuesday that it planned to increase capacity at the Kaarstoe gas plant by 5.7 million cubic metres per day (mcm/day) to 93.7 mcm/day from Oct. 1, the start of the 2016 gas year.

Gassco also said it was planning to expand transportation capacity from the Kvitebjoern field to the Kollsnes gas processing plant by 9.5 mcm per day from the end of 2016.

Statoil is a technical service provider at both gas plants and operates the Kvitebjoern field.

Gassco operates Norway's offshore pipeline system on behalf of Gassled venture, which includes firms owned by Allianz and UBS funds.

The operator said in the report it was also "evaluating potential for new gas transport solutions from the Barents Sea", which is estimated to hold most of the undiscovered gas resources in the Norwegian shelf.

"To keep gas production from the NCS high over the long term, further development of the gas transport system will be needed," Gassco said.

The decision to build a pipeline will depend on the exploration results in the Barents Sea, a Gassco spokeswoman said later, repeating previous position.

Any plans for a new pipeline could be complicated, however, by ongoing litigation between Gassled's private partners and the Norwegian government over its decision to cut gas transportation tariffs.

Norway exported a record 108.4 billion cubic metres (bcm) of gas via pipelines to receiving terminals in Europe last year, up from 101.1 bcm in 2014.

Projections from the Norwegian Petroleum Directorate showed Norway's total gas production - which includes output from the Snoehvit gas field exported by tankers - is expected to fall to 106.6 bcm from a record 115 bcm in 2015.

This decline could partly be explained by Troll's production quota falling to 30 bcm for the 2015 gas year, which runs until Oct. 1, from 34.4 bcm the previous gas year, data from the Norwegian Petroleum Department (NPD) showed.

(Reporting by Nerijus Adomaitis and Stine Jacobsen; editing by David Clarke)


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