Snøhvit contracts signed

The American El Paso Global LNG Company will purchase 2.4 billion cubic metres of gas per year. The Spanish Iberdrola S.A will purchase 1.6 billion cubic metres annually. Gaz de France and TotalFinaElf volumes total 1.7 billion cubic metres per year.
Statoil's sales total nearly 1.3 billion cubic metres per year. In addition, Statoil sells 1.7 billion cubic metres per year on behalf of the Norwegian state.
Deliveries will begin when Snøhvit comes on stream, which is planned for autumn 2006. The sales agreements apply for a period of 17-20 years.
Through these agreements the project has secured the offtake of gas volumes equivalent to the design capacity of the LNG plant that is to be built on Melkøya near Hammerfest in Finnmark county.
"We have considered it to be essential to enter into long-term agreements to ensure the necessary sales and establish transport arrangements. This will give the project a solid predictable technical and commercial basis and ensure risk management," says Otto Granli, vice president for gas sales and shipments in the Snøhvit project.
"The Snøhvit LNG project is in this respect similar to other major, large investment LNG-projects supplying gas to the USA and Europe."
The liquefied gas will be transported from Finnmark by specialised LNG carriers to buyers in the USA and Europe.
In the USA, the Snøhvit gas will be priced according to the prevailing spot price. The price of the gas to Europe will be comparable to alternative energy products.
Operator Statoil has a 22.29 per cent share in the Snøhvit licence. The other licensees are TotalFinaElf with 18.40 per cent and Gaz de France with 12 per cent.
Norsk Hydro has 10 per cent, Amerada Hess 3.26 per cent, RWE-DEA Norge 2.81 per cent and Svenska Petroleum Exploration has 1.24 per cent. The Norwegian state has a 30 per cent interest which is being handled by Petoro.
A pre-condition for the agreements is that the Storting (parliament) approves the Snøhvit project on conditions consistent with the Snøhvit group's development applications and that other approvals from relevant authorities are obtained.