Bloomberg News

Lundin Says Pipeline Needed to Make Barents Sea Gas Profitable

August 29, 2012

Lundin Petroleum AB (LUPE), which has interests in eight licenses in the Barents Sea off northern Norway, said gas discoveries in the area may stay undeveloped until a south-bound export pipeline is built.

Discoveries that aren’t profitable to develop because of lacking infrastructure could be left in the ground, Chief Executive Officer Ashley Heppenstall said yesterday in an interview in Stavanger, on Norway’s western cost. “I’d be lying if I said we didn’t wish for a pipeline to be built.”

Statoil ASA (STL), Norway’s biggest oil and gas producer, has said it favors an expansion of its liquefied natural gas plant which processes output from the Snohvit field, the first to be developed in the Barents Sea, over a pipeline. Companies such as Det Norske Oljeselskap ASA (DETNOR) have also said that failing to build pipes could strangle new gas finds in the Barents Sea.

Norway is moving into the waters off its northern tip to boost output after oil production fell by half in the past decade amid dwindling North Sea output. Companies including Statoil and Total SA (FP) of France have over the past year made commercial discoveries of oil and gas in the Barents Sea such as Skrugard, the first in more than a decade.

Lundin and Det Norske share interests in the Skalle gas find in the Barents Sea, and are drilling the Salina prospect in the area. Det Norske CEO Erik Haugane said Aug. 15 he hoped it would be an oil find so it could be developed profitably.

While Lundin might be “less aggressive” in the Barents Sea if it knew it only had a chance of finding gas and not oil, it believes further discoveries will force a solution for exports, Heppenstall said.

“I’m a firm believer in market forces. If the resources are there, there will be an export solution,” he said.

To contact the reporter on this story: Mikael Holter in Oslo at mholter2@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman in Oslo on at jbergman@bloomberg.ne


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