StatoilHydro revises Snøhvit project investment estimates

StatoilHydro has presented a revised investment estimate for the Snøhvit project as part of the Norwegian authorities' annual updating of projects under development.

Offshore staff

OSLO -- StatoilHydro has presented a revised investment estimate for the Snøhvit project as part of the Norwegian authorities' annual updating of projects under development.

The overall plan for development and operation (PDO) and the plan for installation and operation (PIO) of Snøhvit were approved by the Norwegian Storting (parliament) in March 2002. The Snøhvit project was divided into four phases, of which Phase 1 – the development and start-up phase – was described in detail in the plan for development and operation.

Snøhvit is the first LNG project in Norway. The plant came on stream in September 2007 as the first field development in the Barents Sea.

The final development costs for Phase 1 of Snøhvit are NOK 48.1 billion ($7.6 billion) in nominal terms, an increase of NOK 3 billion ($475 million) compared to the estimate of September 2005. The increase is in its entirety related to the completion of the onshore plant.

The company reports challenges concerning regularity and capacity during the start-up of Snøhvit. In order to reach the planned capacity of the plant and to ensure stable and safe operations, a separate project has been established to further evaluate the most appropriate measures for this purpose.

A final decision on this matter will be taken in 2009, based on further experiences gained from the plant. The company has informed the partners that the costs of this project are expected to be in the range of NOK 2.5 to 5.5 billion ($396 to $872 million), depending on the solution chosen.

Since the scheduled shutdown this summer, Snøhvit has maintained stable production at around 80% of planned capacity. During a scheduled shutdown this month, the company will implement a number of measures to improve the regularity of the plant, including the replacement of seawater coolers and measures to limit the emission of nitrogen oxide (NOx) and carbon dioxide (CO2).

StatoilHydro has also presented an updated investment estimate regarding the future development of Snøhvit for the period 2015 to 2032. The overall investment estimate for Phases 2 to 4 is NOK 20.8 billion ($3.2 billion), which is NOK 7.5 billion ($1.2 billion) higher than the estimate of September 2005.

10/15/2008

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