One of three gas supply contracts signed by Norway's gas negotiating committee (GFU) could be the key to solving a dispute between Norwegian and British governments over gas exports from Frigg field in the North Sea.
GFU agreed to supply power generator ScottishPower 1.7 billion cu m of gas from another field, Froy, off Norway, starting when the field goes on stream in October 1995.
The deal involves about 60% of Froy's associated gas, which is owned by field partners Den norske stats oljeselskap AS and Norsk Hydro AS. Both are GFU members, along with Saga Petroleum AS.
However, exports of Norwegian gas to the U.K. through one of Frigg's two export pipelines are still officially under negotiation. Norway wants to substitute gas from new fields for declining production from Frigg. Britain says no.
A Statoil spokesman said the Norwegian view is that gas for ScottishPower could be supplied under the existing treaty. The U.K.'s Department of Trade & Industry (DTI) is adamant that the Frigg treaty does not cover gas from new fields.
A DTI official said there are a number of points on which the Norwegians and British could not agree, and Frigg negotiations are "going nowhere at the moment."
How ScottishPower will get around this problem is not clear to DTI.
DTI said no Frigg treaty meetings are scheduled between Norway and Britain at the moment, although an announcement is expected in the next few weeks.
A ScottishPower spokesman explained its contract is conditional on arrangement of gas imports through Frigg facilities. No alternative route is under consideration.
ScottishPower intends to approach DTI to explain its view that the prospect of new gas sales is justification to resume the talks.
If the outcome is favorable, Froy gas will be brought ashore at St. Fergus, Scotland, for processing. The gas is destined mainly for sale by subsidiary Caledonian Gas when the U.K. gas market is liberalized in 1996.
THE CONTRACTS
Statoil said the total value of the three GFU contracts is 8 billion kroner ($1.1 billion). Total deliveries will amount to more than 13 billion cu m of gas.
ScottishPower values the Froy gas deal at about 100 million ($156 million).
Largest of the three contracts is between GFU and Mobil Erdgas-Erdol GmbH of Germany. From 1996 to 2014 Mobil will receive more than 10 billion cu m of gas, which will travel mainly through Europipe to the Emden, Germany, terminal.
The contract gives Mobil security of additional long term supplies. Mobil Germany has imported Norwegian gas since 1985.
Spain's state utility Enagas signed the third contract, which commits Norway to delivery of I billion cu m of gas during a 2 year period to the end of March 1996. Deliveries have begun, with gas traveling through the new Zeepipe trunkline to Zeebrugge, Belgium, and from there through the French grid to Spain.
The Statoil spokesman said the Enagas deal will be supplied by associated gas from Snorre, Brage, and Veslefrikk fields and possibly Tordis field when it is developed.
GFU and Enagas hurried the deal through in less than 2 months by incorporating the new volumes under the Troll field sales framework. The gas is being used to meet unexpectedly rapid Cams in Spanish demand.
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