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Statoil plans oil hub on Arctic edge

Tuesday, February 12 12:25:56

Norway's Statoil will construct an oil-receiving terminal near the northern tip of the European continent as it prepares for future oil finds in the Arctic Barents Sea, it said today.

Statoil will store oil in two mountain caverns near Veidnes, 1,400 kilometres (870 miles) north of Oslo, and plans a facility there to serve as the region's oil hub once Arctic oil exploration takes off.

"This is part of the ambition of making northern Norway the country's next big petroleum region," Oeystein Michelsen, Statoil's development chief for Norway, said.

"Because of this potential, it is important to have a concept that also ensures the necessary flexibility to tie in future discoveries to the Veidnes oil terminal," he said in a statement.

The facility will initially serve the Skrugard and Havis finds, which are expected to come onstream in 2018 and produce close to 200,000 barrels per day.

The oil, produced from a floating platform in waters up to 390 metres deep, will be transported to shore through a 280 km pipeline and will be stored in a mountain cavern until it is loaded into tankers.

Statoil provided an early cost estimate of the Skrugard and Havis developments, including the onshore terminal, in the range of 80 billion to 90 billion crowns ($14.5-$16.3 billion) and said it would make a final investment decision in the summer of 2014.

Oil exploration in Norway's part of the Barents is expected to take off in the coming years after the government auctions 72 blocks in the area. And next year it will open to exploration the eastern part of the Barents after settling a 40-year border dispute with Russia.

Skrugard was discovered in early 2011, while the nearby Havis was found in early 2012, putting the recoverable volumes in the license between 400 million and 600 million barrels of oil equivalent.

Statoil is the operator of the license and holds a 50 percent stake, while Eni has 30 percent and state holding firm Petoro has 20 percent.