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StatoilHydro raises Snoehvit cost estimates

Norwegian oil and gas group StatoilHydro said it had revised up its cost estimates for its Snoehvit gas field in the Barents Sea, but that 2008 production would not be affected.

The Snoehvit liquefied natural gas (LNG) export facility in the Arctic has been plagued with problems since its start-up in late 2007. The project has been divided into four phases.

StatoilHydro said estimated development costs for phase 1 at Snoehvit had risen to 48.1 billion Norwegian crowns ($7.73 billion), up 3 billion crowns from a previous estimate in September 2005.

“The increase is in its entirety related to the completion of the onshore plant,” it said.

StatoilHydro raised its investment estimate for the development in 2015 to 2032 for phases 2-4 to 20.8 billion crowns, up by 7.5 billion crowns from the 2005 estimate.

“The increase is in its entirety due to the cost development related to, for example, drilling rigs and other material,” it said.

StatoilHydro said the revisions had no implication for its 2008 production.

The group also established a separate project to evaluate measures to reach planned capacity at Snoehvit, and costs of that project were estimated at between 2.5 billion and 5.5 billion crowns.

A final decision regarding this project will be made in 2009, the company said.

StatoilHydro said the field had maintained stable production at around 80% of capacity after a planned summer shutdown.

In early October, StatoilHydro said it planned a 30-day shutdown starting on October 4 to replace seawater coolers and to see through measures to limit emissions. (Reuters)