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Lloyds List: Statoil envisages Barents gas pipe link

Statoil envisages Barents gas pipe link


Oil giant studies options for transporting energy to Europe as it seeks access to Russia's Shtokman field, writes Martyn Wingrove
Lloyds List; Apr 18, 2006

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STATOIL has conceptual plans to build a gas pipeline from the Barents Sea to existing infrastructure in the Norwegian Sea.

Statoil, a partially privatised state oil firm, is looking at options to transport Barents Sea gas resources to Europe especially if it gains access to Russia's largest offshore gas field Shtokman.

The concept has emerged as the Norwegian government introduces a plan to keep exploration activity in frontier regions in check and keep fishing grounds free of oil rigs.

It also comes as the oil companies celebrate gaining new exploration opportunities from the 19th licensing round, but as rig availability is at its tightest.

Gassco, operator of all Norway's gas pipelines, may have the opportunity of controlling a trunk pipeline from the Hammerfest area to the Norwegian Sea in the next five to 10 years.

The proposed pipeline could link Barents Sea resources with the Asgard trunk line that feeds gas to the Karsto terminal or the Langeled pipe, which will deliver gas to the UK in 2007.

'We have an idea to invest in a pipeline from the Barents Sea to the Norwegian Sea. We are looking at this on a conceptual basis,' Statoil's chief executive Helge Lund said.

'The pipeline could go along the Norwegian coast to link with existing infrastructure. This may only be a concept, but we are chasing this in Statoil and to develop the Barents Sea as a new hydrocarbon province in Europe.'

Statoil has the first Barents Sea gas field development under way with the Snohvit gas resources and a liquefied natural gas plant on Melkoya island near Hammerfest, due on line in 2007.

A second phase could go ahead within five years, based on existing proved reserves, involving another LNG train, plus there is drilling under way this year to find new gas resources.

Mr Lund is hoping Russian gas giant Gazprom will choose it as a partner on the huge Shtokman gas project and that a second phase of its development could involve a pipeline to feed Europe's ever-hungry markets.

Gazprom is expected to allow Statoil and rival Oslo-listed energy group Norsk Hydro to be involved in developing Shtokman with US majors Chevron and ConocoPhillips also incorporated in the joint venture.

Mr Lund thinks this field could hold more gas resources than all of Norway's existing discoveries, so a place in the Gazprom-led joint venture would be highly profitable for any company.

The first phase at Shtokman is thought to involve an onshore LNG plant that will provide products for the growing North American market.

But with potentially Russia's largest gas resources, there could be several phases of development at Shtokman, including more LNG trains and pipelines to Europe.

There could also be more gas resources in the Russian side of the Barents and in the disputed sector of the region.

The Norwegian government and oil companies are hoping drilling in the Barents Sea will result in vast amounts of new oil and gas resources that could be developed over the next ten years.

'With an area twice the size of the Norwegian Sea, the Barents Sea is a huge area and there is great uncertainty in reserve estimates,' said Anita Utseth, the Norwegian secretary of state at the Ministry of Petroleum and Energy.

'A lot of exploration is needed in that part of the Arctic so we are implementing our integrated management plan for the Barents Sea.'

The Norwegian government has launched its management plan for the region, ranging from the needs of the oil industry to the requirements of the country's vast fishing sector and environmental protection organisations.

The plan, a policy outline in this month's white paper, opened up more areas in the Barents Sea for exploration activities, but left the fertile fishing grounds closed to drilling rigs

'This plan is a framework for the petroleum and fishing activity in the Barents Sea and off the Lofoten Islands,' Miss Utseth told a conference this month.

'We have three areas already awarded and have opened up more areas for year-round activity.

'Some areas are not open, including off the Lofoten Islands, but we will continue collecting seismic data through the Norwegian Petroleum Directorate.'

The oil industry in Norway, including Mr Lund, is pleased that the Barents Sea is more open for operations, but disappointed that the highly prospective Nordland VI and VII, plus the Troms II areas, are closed off until the next government review in 2010.

'Public sentiment has changed for the better on exploring the northern seas and seen the positive local impact on operations in the Barents Sea,' Mr Lund said.

'We are hoping more exploration acreage will be opened so we have looked at doing an impact assessment of operations in the Nordland VI and VII areas.'

Exploration activity in the Barents Sea has seen some success in finding gas resources around the Snohvit area and one oil field has been found by Italian firm Eni at Goliat.

The government and industry is hoping there will be more success from exploration in existing licences and those 17 blocks offered in this month's 19th round.

Statoil gained five licences in the round in the Barents and Norwegian Sea and Norsk Hydro gained two.

In the round the government gave out 17 blocks in the Barents and 16 in the Norwegian Sea to 17 oil companies.

BG Group was the clear and surprising winner, landing five operatorships and participating in three other licences. Other winners included oil major Shell, European firms Total, Gaz de France, RWE Dea, US firms Chevron, ConocoPhillips and Amerada Hess.

Norwegian independent firms DNO, Noreco, Revus and Discover Petroleum also gained licence stakes.

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