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Arctic oil terminal signs land lease deal

Norterminal will have an annual throughput capacity of 20 million tons of oil products.

Norterminal is one step closer to building a large-scale oil and gas terminal outside Kirkenes in the Norwegian, Russian borderland. “We will offer clients a “Safe haven” for shipping in rough Arctic waters,” says Jacob B. Stolt Nielsen, president of the company.

Location

“The contract for long term lease of some 100 hectares area along the coastline near Kirkenes airport was signed on Tuesday,” says Jacob B. Stolt-Nielsen, President of Norterminal.

The Barents Region and the Arctic is believed to experience a boom in oil and gas exploration in the decades to come.

“We will offer clients a “Safe haven” for shipping in rough Arctic waters,” says Jacob B. Stolt Nielsen in a strategy note posted on the company’s portal.

The company plans to invest between NOK 2 to 4 billion (€270 to 539 million) in the terminal aimed for reloading and storage of up to 700,000 cbm of oil products.

The construction shall be completed and operational by 2016-2017, Norterminal says in a press-release. Increase in oil production in the Barents Sea and the Arctic makes a market for establishing such huge oil terminal on Norway’s Arctic coast. The location is just some few tens of kilometers from the maritime border between Russia and Norway in the Barents Sea, and Norterminal plans to offer transshipment and storage capacity also for the ongoing onshore oil and gas production in and around the Timan-Pechora Basin in Nenets Autonomus Okrug, in addition to coming Russian offshore fields in the eastern Barents Sea.

“Development of new oilfields in the Barents Sea and the opening of new shipping lanes from Russia and Norway makes Finnmark to a strategic suitable place for interim storage of oil,” Stolt Nielsen told BarentsObserver when presenting the plans last autumn.

“We are in a dialog with several Russian companies, but we can’t yet comment on which companies it is. But the response so far has been good.”

The company argues that Russian oil tanker industry will benefit from such new terminal in the borderland between the two countries. “It will reduce the need for ship-to-ship transfers, and improve logistics at the end destination. Land based storage solution will reduce risk of environmental accidents and provide reliable uptime independent of weather conditions,” the company writes. Also; logistic costs and throughput cost will be significantly reduced because the terminal is located in an area where non-ice classed tankers with lower costs can load oil products delivered from ice-covered waters by more expensive-to-operate ice-classed tankers.

The annual throughput capacity will be 20 million tons. That is nearly twice the amount of oil products shipped out on tankers from Murmansk last year.