Statoil ASA (NYSE:STO) has decided to shelve its Kristin gas export project (:KGEP) due to unsustainable economics. The Norwegian oil giant’s partners in KGEP also support the decision.
Located on the southwestern part of the Halten Bank in the Norwegian Sea, the Kristin field is estimated to hold recoverable reserves of around 1.5 trillion cubic feet of gas and 240 billion barrels of condensate. The partners of the project include Statoil, Petoro and GdFS, holding 53.4%, 35.6% and 11%, respectively.
KGEP, which received approval in late 2012 in conjunction with the Polarled project, aimed at building a pipeline linking the Kristin field and Polarled. A 300-mile pipeline between the Aasta Hansteen field in the Norwegian Sea and the Nyhamna gas processing facility in western Norway was to be constructed.
However, the partners have now decided to terminate the project due to increased costs and volume risk. Statoil indicated that KGEP represented less than 5% of the Polarled volumes and that the termination will not affect the implementation of the latter.
Moreover, Statoil insisted that the opportunity for a connection of the Kristin field to the Polarled pipeline in the future still prevails as essential connection points continue to be part of the project. The Kristin gas export project comprised alterations to the Kristin platform and a 30-kilometre pipeline to tie into the Polarled pipeline.
Statoil is a major international integrated oil and gas company. In recent times, the company has delivered strong exploration results, adding significantly to its resource base by making several high impact discoveries. The latest finds give the company access to new regions of Norway, Russia, Azerbaijan, Tanzania as well as Australia. These strengthen the company’s position and pave way for profitable long-term growth.
Statoil carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the oil and gas sector include Harvest Natural Resources Inc. (NYSE:HNR), Cheniere Energy Partners L.P. (AMEX:CQP) and Helmerich & Payne, Inc. (NYSE:HP). All these stocks hold a Zacks Rank #1 (Strong Buy).