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THE WALL STREET JOURNAL/DOW JONES NEWSWIRES: Norsk Hydro: Interested In BP's 10% Ormen Lange Share: ďAsked if Norske Shell would be bidding on the project, a spokesman said "we don't comment on commercial matters." (ShellNews.net)

 

DOW JONES NEWSWIRES

October 19, 2004

 

OSLO -- Norsk Hydro ASA (NHY) will consider buying BP's (BP) stake in the massive Ormen Lange natural gas field in the North Sea, the Senior Vice President of Business Development told Dow Jones Newswires Tuesday.

 

BP has announced it is looking to get rid of its 10.34% share in the 397 billion cubic meter gas project, due to come onstream in 2007.

 

Said Norsk Hydro's Kjetil Solbraekke: "We are interested in following up on this opportunity, and will evaluate it along with other projects."

 

The Ormen Lange field is the second largest gas field on the Norwegian Continental Shelf. Gas from the field will be exported to U.K. - forecast to become a net importer of gas over the next two years - and European markets via the new Langeled pipeline.

 

BP said it hopes to sell its minority share in the 397-billion-cubic-meternatural gas project by the end of the first quarter 2005.

 

Ormen Lange, a 60 billion kroner ($1=NOK6.5837) development project lies in the North Sea and will be a key provider to the U.K. and continental Europe.

 

Analyst estimates vary on the value of the project. An Oslo-based analyst at a large Norwegian Bank estimated the total project's value between $5 billion and $7.5 billion.

 

Deutsche Bank (DB) analyst J.J. Traynor estimates BP should fetch between $100m-$200m for its field and pipeline holdings. Other analysts pointed towards the higher end of the scale.

 

A BP spokesman said the bidding would be open to major operators already present in Norway and small to medium size companies that have had little or no access to new acreage.

 

A source at one of Ormen Langes' current owners said interest holders wouldn't get priority bids and that the sale would be an open competition.

 

But analysts say the most likely buyers are the other current shareholders.

 

Norsk Hydro is at the top of several analysts' lists, Besides being current operator on the project with an 18% stake and a stated desire for 7%-9% production growth, Norsk Hydro is flush with cash after spinning off its fertilizer business, Yara ASA (YAR.OS), last spring, another analyst at a large European bank pointed out.

 

"Hydro would be a willing buyer...they've no debt and they want to grow," he said.

 

The analysts also said other shareholders and possible buyers include Royal Dutch Shell (RD) unit Norske Shell , which will be production phase operator with just over 17% ownership; Statoil ASA (STO) with a 10.34% share; and Esso Exploration and Production Norway AS, a unit of ExxonMobil (XOM), with a 7.23% ownership.

 

A Statoil spokesman said the company had received notice of the sale opportunity, but couldn't yet say if the company would be bidding.

 

Asked if Norske Shell would be bidding on the project, a spokesman said "we don't comment on commercial matters."

 

An ExxonMobil spokesman said the company didn't want to comment.

 

An industry source close to the project said the sale would create a great deal of buying interest: "There'll be a hell a lot companies lining up for this one, including Centrica PLC (CNA.LN), Ruhrgas (RUH.YY), and Gaz de France (4774.FR)."

 

-by Ian Talley, Dow Jones Newswires, (47) 22 20 10 58; ian.talley@dowjones.com


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