Buying LNG from Sonatrach

Liquefied natural gas (LNG) is to be supplied by Algerian state oil company Sonatrach to Statoil at the Cove Point terminal in Maryland under a deal between the two companies.

With deliveries set to start in December, this contract covers a billion cubic metres of natural gas annually over a three-year period.

Cove Point is one of four US terminals used to regasify LNG for onward transport. Gas there will be sold to local distributors supplying households, power generators and manufacturers.

The Sonatrach agreement covers about 40 per cent of the capacity available to Statoil at Cove Point, and supplements a similar deal concluded with Tractebel in September.

“We’re very pleased to have signed this contract,” says Otto Granli, Statoil’s vice president for LNG marketing and shipping.

“It helps to underpin our strategy of maintaining a continued commitment to the LNG market.”

The group is due to start supplying 2.4 billion cubic metres of natural gas annually to Cove Point from its Snøhvit development in the Barents Sea.

Until this field comes on stream in 2006, however, Statoil will be buying LNG for this facility from other suppliers.

Statoil Natural Gas LLC has been established as the group’s US gas marketing and trading arm, based with its other American operations at Stamford in Connecticut.

Capacity at Cove Point is shared on an equal basis between Statoil, BP and Shell. Owned by US energy company Dominion, the terminal reopened in mid-August after being mothballed since 1980.

For Sonatrach, the signing of this agreement represents a major step forward in consolidating its presence in the US gas market and will further strengthen the company's cooperation with Statoil.