Statoil Needs 20-30 Years of Cheaper U.S. Gas to Justify Exports

Statoil ASA, Norway’s largest energy company, would need U.S. natural gas prices to stay at least $4 cheaper than European rates for as long as 30 years to justify investing in infrastructure to export the fuel from America.

“There are parties very interested in talking to us in this perspective, so we are following it very closely,” Statoil Chief Financial Officer Torgrim Reitan said in an interview with Bloomberg Television. “But it’s a tough call.”

Statoil would need to assume the price gap between natural gas prices in the U.S. and Europe would hold at about $4 to $5 per million British thermal unit for 20 to 30 years, he said. “It’s a bold belief to take,” Reitan said.

U.S. month-ahead natural gas prices are down from almost $14 per million British thermal units in July 2008 to average about $2.80 in 2012 as technologies such as hydraulic fracturing boost output. The key U.S. Henry Hub price was at $3.56 today, compared with $10.38 for the equivalent-maturity U.K. contract.

Cheniere Energy Inc.’s Sabine Pass export plant will begin shipments in 2015 after becoming the only facility approved by the U.S. government to deliver LNG to countries without a free-trade accord. Some U.S. lawmakers and companies have expressed concerns that exports would lead to higher domestic gas prices.

While there are “strong incentives” to keep gas in the U.S., and risks to assuming the price gap will hold for decades, the government should study easing up on exports, Reitan said.

“LNG exporting is a viable route,” he said. “I will encourage the administration to look at that.”

Statoil is growing abroad to boost output a quarter to more than 2.5 million barrels of oil equivalent a day by 2020.

Two-thirds of the expansion will come from the U.S., where Statoil, 67 percent-owned by the Norwegian state, acquired Brigham Exploration Co. for $4.4 billion in 2011 to enter the Bakken formation in North Dakota.