Statoil Awards Polarled Contracts

Zacks

Norwegian major Statoil ASA (STO) has awarded contracts valued at around NOK 4 billion ($721 million) for the construction of a new 482 kilometer Polarled pipeline. The pipeline will export gas from the Aasta Hansteen field in the Norwegian Sea to the Nyhamna onshore processing plant in northern Norway.

The contracts resulted from a broad international competition among the pre-qualified suppliers. These were awarded by Statoil on behalf of its Polarled partners. Japan's Marubeni Itochu and JFE secured fabrication contracts for line pipe, Malaysia's Wasco got the coating contract, while the Netherlands' Allsea will perform pipe-laying operations.
 
According to Statoil, it is the biggest pipeline running for around 482 kilometers to be laid at a water depth of 1,265 meters. The pipeline will require 325,000 metric tons of steel. The order for steel is worth about NOK 2 billion and includes pipes, bends and buckle arrestors.
 
The coating contract is pegged at about NOK 1.2 Billion, while the pipe-laying contract has been estimated at NOK 750 million. The contracts are subject to regulatory approval, expected in the second half of the year.
 
The preliminary engineering work has started and installation of the pipeline is expected by 2015. Aasta Hansteen is located around 300 kilometers off northern Norway and is projected to hold about 47 billion cubic meters of gas.
 
Statoil has a stake of about 75% in the field, while OMV and ConocoPhillips (COP) have an interest of 15% and 10%, respectively.
 
Statoil holds a Zacks Rank #3, which is equivalent to a short-term Hold rating. However, there are other stocks in the oil and gas sector – Cabot Oil & Gas Corp (COG) and Memorial Production Partners L.P. (MEMP) – which hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.
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