New Arctic oil terminal in Finnmark

September 5, 2012

The Norwegian coastal areas to the Barents Sea are attracting big oil. New fields in the Arctic Barents- and Kara Seas bring along needs for reloading and storage terminals. The players in the market are now looking towards the sheltered waters along the coast of Finnmark. Kirkenes can become the gateway to all the new Arctic shipping lanes that opens as the sea-ice melts away and new icebreaking tankers are designed.

“We believe Gamneset is the best location in Sør-Varanger,” says Jacob B. Stolt Nielsen to BarentsObserver. He owns the newly established Norterminal AS, the company to build what they call the “new strategic oil terminal in Finnmark.”

Stolt-Nielsen visited Kirkenes on Monday this week and presented the plans for the regional authorities.

Gamneset is located near Kirkenes main airport in a fjord that shelters a possible new harbor and terminal facilities from the open and rough Barents Sea. Russian waters are just a few hours away.

Kirkenes is believed to be a central trans-shipment location for the Northern Sea Route along Russia’s Arctic coast to Asia. To the west is the Northwest Passage, believed to be important for oil shipments out of Arctic Canada. Shipdesigners, like Aker Arctic in Helsinki, are already talking about a Trans Polar Route straight across the North Pole. The rapid melting of the Arctic ice-cap is changing the geopolitical map in the north with new global trading routes for shipping.

Both Norwegian and Russian authorities are now opening the earlier disputed waters just north of Kirkenes for extensive oil exploration.  Big oil companies like Exxon, Eni and Statoil have all signed cooperation agreements with Rosneft for the fields on the Russian continental shelf. Eni and Statoil are already in the start-up phase for fields in the Norwegian sector of the Barents Sea. Russian Lukoil knocks on the door to the Norwegian shelf.

“Development of new oilfields in the Barents Sea and the opening of new shipping lanes from Russia and Norway makes Finnmark to a strategic suitable place for interim storage of oil,” says Stolt Nielsen. He confirms to BarentsObserver that they are looking to Russia for customers to deliver oil to the new terminal.

“We are in a dialog with several Russian companies, but we can’t yet comment on which companies it is. But the response so far has been good.”

The project study for Norterminal indicates storage capacity of one million cubic meter of crude oil in caverns and tanks. Between 150 and 300 tankers will make port call to the terminal annually, the largest up to 300,000 dwt. Up to 10 million tons of crude oil can be shipped from the Kirkenes terminal annually. In comparison, some 11 million tons was shipped out from the different terminals and ship-to-ship reloading points in the Kola bay and Vitino last year. Shipments from and via Murmansk region are expected to increase in the years to come.

Estimated costs for the new Kirkenes terminal are someplace between 1,5 and two billion NOK (€205 million