Equinor has delayed start-up at its Hammerfest LNG plant in Norway by a further six months as it deals with the aftermath of a fire that ripped through the facility in September last year.
The revised start-up of the liquefied natural gas facility at Melkoya in northern Norway is now 31 March next year, the operator said on Monday.
The new start-up target is due to the comprehensive scope of work required for remediation work and also restrictions related to the coronavirus pandemic.
Even though the fire was limited to the air intake system of one of the plant’s five big gas turbines, the blaze and subsequent firefighting actions caused substantial damage to the plant.
An Equinor spokesperson declined to say what the cost of the repair work will be for Equinor.
"We have not disclosed costs of the repairs, but we expect around $100 million booked as other income from insurance due to this incident," he said, adding this would be booked in the company's first-quarter 2021 financial statements.
Equinor has had a measure of luck with regards of the timing of the incident as all investment costs will be covered under the Norwegian Covid-19 petroleum tax relief package, which means that the state will cover about 90% of the costs of the repairs.
However, loss of income will not be covered as tax-deductable costs.
Equinor plans to switch from gas-fired turbines to electricity from the power grid at the LNG plant. However, the postponement does not affect these plans.
"There will be some repairs and overhaul on the turbines, but we will not procure new turbines. The project for electrification of Melkoya is still being matured, and our plan is to make a decision on concept selection before the summer," the spokesperson said.
Currently, Norwegian gas export system operator Gassco is studying the possibility of exporting gas from Snohvit, which supplies gas to Hammerfest LNG, through a future gas export pipeline from the Barents Sea.
It is not known if the fire at Melkoya will affect these plans, but an 18 months shutdown would leave more Snohvit gas for export through the pipeline.