Snohvit Gas Contracts Signed
Five of the licensees in the Snohvit Field in the Barents Sea, Statoil, Norsk Hydro, RWE-DEA, Amerada Hess and Svenska Petroleum Exploration, have signed separate contracts for the sale of liquefied natural gas (LNG) with two international energy companies. Gaz de France and TotalFinaElf will lift their own gas from the field. The El Paso Global LNG Company will purchase 2.4 billion cubic meters of gas per year. The Iberdrola S.A. will purchase 1.6 billion cubic meters annually. Gaz de France and TotalFinaElf volumes total 1.7 billion cubic meters per year.
Statoil's sales total nearly 1.3 billion cubic meters per year. In addition, Statoil sells 1.7 billion cubic meters per year on behalf of the Norwegian state.
Deliveries will begin when Snohvit comes on stream, which is planned for autumn 2006. The sales agreements apply for a period of 17-20 years.
Through these agreements the project has secured the offtake of gas volumes equivalent to the design capacity of the LNG plant that is to be built on Melkoya near Hammerfest in Finnmark county.
"We have considered it to be essential to enter into long-term agreements to ensure the necessary sales and establish transport arrangements. This will give the project a solid predictable technical and commercial basis and ensure risk management," says Otto Granli, vice president for gas sales and shipments in the Snohvit project. "The Snohvit LNG project is in this respect similar to other major, large investment LNG-projects supplying gas to the USA and Europe." The liquefied gas will be transported from Finnmark by specialised LNG carriers to buyers in the USA and Europe.
In the USA, the Snohvit gas will be priced according to the prevailing spot price. The price of the gas to Europe will be comparable to alternative energy products.
Statoil as operator has a 22.29 percent share in the Snohvit license. The other licensees are TotalFinaElf with 18.40 percent and Gaz de France with 12 percent. Norsk Hydro has 10 percent, Amerada Hess 3.26 percent, RWE-DEA Norge 2.81 percent and Svenska Petroleum Exploration has 1.24 percent. The Norwegian state has a 30 percent interest which is being handled by Petoro.
A pre-condition for the agreements is that the Storting (parliament) approves the Snohvit project on conditions consistent with the Snohvit group's development applications and that other approvals from relevant authorities are obtained.