Statoil chooses LNG in Barents Sea

Statoil goes for the expansion of its Melkøya LNG plant on the Barents Sea coast instead of the extension of the Norwegian pipeline grid to the area. Photo: Helge Hansen/Statoil

Liquified natural gas, not pipelines, is Statoil’s preferred development solution for the Barents Sea. The Norwegian government might want it otherwise.


Statoil representatives now confirm that it wants to develop a second train of its Melkøya LNG plant instead of building a pipeline to the Barents Sea.

“The way we see it, this is the best solution,” Knut Gjertsen, leader of the company’s Arctic field development team says to “The LNG plant probably already has the resources needed available, while the pipeline does not”, he adds. Statoil also believes the LNG solution will be both quicker and more cost efficient. The LNG plant can be ready in 2019, while a pipeline will not be ready before 2021, Gjertsen says.

The LNG solution will be based on Statoil’s existing Melkøya plant in Hammerfest. The Melkøya II will get its resources from new resources discovered in the region, among them the Skrugard and the Havis fields. An investment decision can be made already in 2013, the company believes.

Statoil, which owns 36,79 percent of the Snøhvit license, is likely to soon inform its licence co-owners Petoro (30%), Total (18,40), GDF SUEZ (12%) and RWE Dea (2,81%) about its decision. While the commercial partners are likely to agree with the choice, it will be harder to convince the Norwegian government, which so far has signaled a higher level of interest in a pipeline.

As previously reported, both Ola Borten Moe and Jonas Gahr Støre, the Norwegian Ministers of Petroleum and Energy and Foreign Affairs respectively, appear to prefer a pipeline solution.

New major discoveries in the Barents Sea will strengthen the two ministers’ stance. Norway is currently unfolding a major campaign on seismic mapping of the region, and this data are likely to be a key part of the government’s final dicision. As BarentsObserver has reported, seismic mapping from 2011 indicates that resources in the formerly disputed zone with Russia are significant.

However, the pipeline solution will require also the long-commitments of European buyers. As previously reported, the big countries on the continent, among them Germany, has reportedly so far not expressed a sufficiently high interest in the Norwegian Arctic gas.