By MIKAEL HOLTER
STAVANGER (Bloomberg) -- Statoil canceled
plans to build a pipeline tying the Kristin natural-gas field
to the planned $4 billion Polarled tube in the Norwegian Sea
because of costs and volume uncertainties.
Scrapping the $324 million project wont affect the
Polarled pipeline, the company said in a statement. The Kristin
gas-export project represented less than 5% of volumes planned
to pass through Polarled, it said. Costs included modifications
to the Kristin platform, Statoil spokesman Morten Eek said in a
With the deteriorating project economics, we did not see
grounds to continue the KGEP development, Statoils
Polarled development-project director Haakon Ivarjord
said in the statement.
Statoil, which operates more than 70% of Norways oil
and gas production, has said it will be more selective on
future investments amid higher costs and falling profitability
throughout the industry. The 67% state-owned company last year
delayed its Johan Castberg oil project in Norways Barents
Sea and the Bressay heavy-oil development in United
The 30 km KGEP was supposed to connect the new 480 km
Polarled pipeline, linking the Aasta Hansteen field to the
Nyhamna terminal, with the existing Aasgard transportation
infrastructure. The possibility of linking the Kristin field to
Polarled is maintained as necessary connection points
continue to be part of the project, Statoil said.
Polarled, which will become the worlds deepest
offshore gas pipeline at as low as 1,300 m below sea level, was
described by Statoil a year ago as opening new opportunities
for gas exports from the Norwegian Sea by tying in existing and
future discoveries. Producers including Statoil, Royal Dutch
Shell and ConocoPhillips will invest $4.5 billion in the
pipeline, which is due to start operating by the end of
Owners in Gassled, Norways gas-pipeline network, have
said they would refuse to buy stakes in Polarled from the oil
companies building it after the countrys new government
maintained plans to cut the tariffs operators can charge for
gas transportation by as much as 90%.
The termination of the Kristin pipeline wasnt related
to reduced divestment opportunities for the partners, which
also include Petoro and GDF Suez, Statoils Eek said. He
declined to provide further details on the companys
volume estimates for the Kristin pipe.
The cancellation led to the partial termination of Kongsberg
Gruppens $6.9 million delivery contract for the Polarled
pipeline. The cancellation had a negative impact of about $3.6
million, Kongsberg said in a statement.