A non-binding letter of intent has been signed by Statoil (STO)
with US-based Dominion energy company
. This gives Statoil the exclusive right to negotiate a deal which will secure access for the group to extra capacity at the Cove Point liquefied natural gas (LNG) terminal in Maryland.
If the agreement is concluded, Statoil will take the entire capacity increase for a 20-year period. The group will thus more than quadruple the amount of capacity available to it at the terminal.
Dominion is planning to expand the capacity at the terminal, where LNG is stored and regasified before being piped to customers.
The expansion includes two new storage tanks with a total capacity of approximately 195 million cubic metres.
Regasification and pipeline capacity for onward transport to customers will also increase by an annual quantity totalling approximately 7.7 billion cubic meters.
The new plant is scheduled to become operational in November 2008.
The group already markets significant amounts of natural gas from
LNG through Cove Point, which lies in Maryland south
-west of Washington DC. It currently controls a third of LNG reception capacity at the Cove Point terminal
, representing an annual capacity of approximately 2.4 billion cubic metres.
Between 2006 and 2023, Statoil is due to deliver 2.4 billion cubic meters of LNG annually to this facility from its Snohvit development
in the Barents Sea
Until production from this field begins, the group is buying LNG from other producers in Algeria and Trinidad and Tobago
Cove Point is one of four LNG terminals
in the USA, and was reopened last August after being mothballed since 1980.