Sonatrach and StatoilHydro recently sealed a long-term partnership to bring liquefied natural gas (LNG) to and market gas from the Cove Point receiving terminal. Sonatrach will have access to 2 billion cubic meters per year of regasification capacity at the terminal for 15 years from the beginning of 2009, and StatoilHydro will purchase 1 billion cubic meters of LNG per year from 2009 to 2014.

“This agreement allows Sonatrach to reinforce and consolidate its position in the gas market of the Atlantic Basin following the acquisition of capacity at Isle of Grain in the UK, and to capture arbitrage opportunities with other markets,” said Chawki Mohamed Rahal, vice president of commercialization at Sonatrach. “It is also a considerable advance in the progressive internationalization of Sonatrach, in gaining downstream access in the world’s largest gas market in a way similar to what has already been achieved in the UK, Spain and Italy.”

StatoilHydro has a long-term throughput arrangement with Dominion, the owner of the Cove Point terminal in Lusby, MD. Since 2003 StatoilHydro has delivered LNG to Cove Point from suppliers in Trinidad, Algeria and Egypt. The company has access to a third of the import capacity for LNG at the terminal, which amounts to around 2.4 billion cubic meters of gas annually. Cove Point is being expanded and StatoilHydro has secured all of the new capacity. StatoilHydro will thus achieve access to capacity amounting to some 10 billion cubic meters of gas annually from 2009.

“The agreement is an important step in ensuring supply for the Cove Point Expansion project while expanding StatoilHydro’s presence in the US,” said Rune Bjornson, the StatoilHydro executive vice president for natural gas. “It is an important broadening of the successful commercial relationship between Sonatrach and StatoilHydro, and strengthens StatoilHydro’s role in the international LNG market, supplementing equity supply from Snohvit [see NGI, Sept. 24, 2007].”

StatoilHydro said last month the LNG carrier Arctic Discoverer docked at Cove Point on Feb. 21 after a voyage of 12 days across the Atlantic Ocean with a cargo from the world’s most northerly export facility for LNG at Melkoya outside Hammerfest in Norway (see NGI, Feb. 25).

Under the Cove Point expansion, which is expected to be completed later in 2008, sendout capacity will expand from 1 Bcf/d to 1.8 Bcf/d, and storage capacity will increase from 7.8 Bcf to 14.6 Bcf (see NGI, Oct. 9, 2006). The project includes expanding the Dominion Cove Point pipeline in Maryland and adding a pipeline and storage capacity in Pennsylvania.

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