Statoil to raise U.S. LNG storage capacity
reuters.com
Wed February 11, 2004 06:50 AM ET
(Adds CEO quotes, detail, background)
OSLO, Feb 11 (Reuters) - Norway's Statoil said on Wednesday it had signed a preliminary deal with U.S. energy group Dominion (D.N: Quote, Profile, Research) to more than quadruple its liquefied natural gas (LNG) capacity at a U.S. import terminal, preparing for a growing market.
Statoil controls a third of LNG reception capacity at Dominion Resources Inc 's expanding Cove Point terminal in Maryland, on the east coast of the United States, corresponding to annual capacity of about 2.4 billion cubic metres.
"We regard LNG as an important future gas source," Statoil acting chief executive Inge Hansen told Reuters on the sidelines of a presention of the company's fourth-quarter result.
"Terminal capacity in the United States will clearly be a bottleneck in the next 10 years. When this opportunity came up, we considered it very interesting," he said after Statoil reported a 13 percent rise in quarterly operating profit.
Statoil said the non-binding agreement with Dominion gave it exclusive rights to negotiate to secure the extra LNG capacity at Cove Point, one of four major U.S. import terminals for LNG.
"If the agreement is concluded, Statoil will take the entire capacity increase for a 20-year period," it said in a statement. "The group will thus more than quadruple the amount of capacity availabale to it at the terminal."
Statoil, Norway's biggest oil and gas producer, is operator of the huge Snoehvit LNG project in the Arctic Barents Sea, due to begin producing in 2006 as Europe's largest of its kind.
The field will link the Norwegian continental shelf to an emerging transatlantic LNG market.
Between 2006 and 2023, Statoil is due to deliver 2.4 billion cubic metres of LNG annually to Cove Point from Snoehvit. Until Snoehvit production begins, it is buying gas for the terminal from producers in Algeria, Trinidad and Tobago.
"Snoehvit is our first step. We are also looking at some other LNG projects," Hansen said, but did not elaborate.
Statoil agreed last month to buy Norwegian rival Norsk Hydro (NHY.OL: Quote, Profile, Research) 's 10 percent stake in Snoehvit, boosting its take in the field to 33.5 percent.
State-controlled Statoil reiterated its 2004 production target of 1.12 million barrels of oil equivalent per day (boed) and said its 2007 goal of 1.35 million boed was "challenging but realistic".
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