Equinor delays Norway LNG restart

4/26/2021

Norwegian oil and gas company Equinor has revised the estimated start-up date for its Arctic LNG plant at Hammerfest to March 31 next year to allow more time for repairs after a fire last year, it said.

A September 2020 blaze shut down production at the Melkoeya plant, also known as Hammerfest LNG, and Equinor had previously scheduled a restart for Oct. 1 this year.

The six-month delay reflects the need for comprehensive repair work that has been hampered by operational measures to handle the COVID-19 situation, Equinor said.

Europe's only large-scale LNG plant, at Melkoeya island just outside the Arctic town of Hammerfest, can process 18 million cubic metres (mcm) of gas per day when fully operational.

Gas is piped from the offshore Snoehvit field, which is 160km (100 miles) away in the Barents Sea and was also forced to shut as a result of the Hammerfest plant's closure.

Extensive firefighting work potentially exposed more than 70,000 unique components to seawater and the most time-consuming repairs would be the replacement of more than 180 km of electric cable, which is due to arrive by this summer, Equinor said.

Other equipment will not arrive before the summer or autumn, while several compressors needed to be removed and sent to the supplier for repair, the company added.

Last week Norway's oil and gas safety watchdog presented its investigation into the fire, exposing several breaches of operating procedures.

Equinor expects to book around $100 million of insurance payments in its first-quarter accounts as compensation for lost production, in line with previous guidance, company spokesman Eskil Eriksen said.

He declined to comment on the cost of repair or insurance claims for the damages to the plant itself.

The company recently received a Russian LNG cargo at Melkoeya to help ensure the plant remained as cold as possible, but has not said whether more such supply will be required.

"If we need LNG for operational circumstances at the plant, we will of course go in the market and bring it in," Eriksen added.

Equinor's January-March earnings report is due out on April 29. (Reporting by Nora Buli Editing by Terje Solsvik, David Goodman and Pravin Char)