Statoil ASA (STO) is mulling over expanding production at its Snoehvit liquefied natural gas (LNG) plant in the Arctic.
The expansion would include the second processing train in 2018 to treat gas from recent discoveries in the Barents Sea.
Statoil’s plant, which treats gas from the offshore Snoehvit field, is situated on Melkoeya Island in Europe’s northernmost tip. It enjoys a monopoly in Europe as it is the only LNG processing plant over there.
The plant processes gas from the offshore Snoehvit field after which it is shipped by LNG tankers to the end consumers. The plant has an average annual output of approximately 5.76 billion cubic meters, all of which is exported.
Statoil is in the conceptualization stage and expects to put forward a proposal by the fourth quarter of 2012. The investment decision based on the concept report would be made by the fourth quarter of 2013. Thereafter, production is slated to commence in late 2018, if the company moves ahead with the consent of all parties concerned.
The processing capability of the new train could not be judged so early. However, the expanded facility would process volumes from the north of the Snoehvit field in addition to Statoil's Tornerose prospect and the Eni SpA (E)-operated Goliat field.
Several drilling expeditions have occurred at the Barents Sea since 1980. But only three major discoveries have been made out of more than 80 exploration wells. The discoveries worthy of mention are Snoehvit, Goliat and Skrugard.
Statoil, Total S.A. (TOT), GDF Suez, Hess Corporation (HES), RWE Dea and Norwegian-state owned firm Petoro are partners in the Snoehvit field with interests of 33.53%, 18.40%, 12%, 3.26%, 2.81% and 30%, respectively. The field started operations in 2007.
Statoil has a Zacks #3 Rank, which translates into a Hold rating for a period of one to three months. Over the long term, we are Neutral on the stock and expect it to perform in line with the broader market indices.
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