Statoil Bets on US LNG

Norway's Statoil has signed a letter of intent with US-based Dominion energy company. This gives Statoil the exclusive right to negotiate a deal which will secure access for the group to extra capacity at the Cove Point LNG terminal in Maryland, USA.

If a final agreement is reached, Statoil will take the entire capacity increase for a 20-year period - more than quadrupling the amount of capacity available to it at the terminal. Dominion is planning to expand the capacity at the terminal, where LNG is stored and regasified before being piped to customers. The expansion includes two new storage tanks with a total capacity of approximately 195 million cubic metres.

Regasification and pipeline capacity for onward transport to customers will also increase by an annual quantity totalling approximately 7.7 billion cubic metres. The new plant is scheduled to become operational in November 2008.

The group already markets significant amounts of natural gas from LNG through Cove Point, which lies in Maryland south-west of Washington DC. It currently controls a third of LNG reception capacity at the Cove Point terminal, representing an annual capacity of approximately 2.4 billion cubic metres. Between 2006 and 2023, Statoil is due to deliver 2.4 billion cubic metres of LNG annually to this facility from its Snohvit development in the Barents Sea. Until production from this field begins, the group is buying LNG from other producers in Algeria and Trinidad and Tobago. Cove Point is one of four LNG terminals in the USA, and was reopened last August after being closed since 1980.