Norway LNG plant restart faces new delay in blow to Europe's gas supply

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Equinor's logo is seen at the company's headquarters in Stavanger, Norway December 5, 2019. REUTERS/Ints Kalnins

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OSLO, Jan 31 (Reuters) - Norway's Hammerfest LNG plant faces a further delay to restarting production after a fire in 2020, operator Equinor (EQNR.OL) said on Monday, delivering a fresh blow to hopes of securing more gas for Europe to help reduce surging prices.

The plant, operated by Equinor, is now expected to resume output on May 17, more than six weeks later than the previous goal of restarting on March 31.

"We work systematically to deliver on the plan we established, but challenges related to COVID-19 restrictions require that we need more time to prepare the plant for safe and stable start-up and operations," Equinor senior vice president Grete Haaland said in a statement.

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Europe's only large-scale LNG plant, at Melkoeya island just outside the Arctic town of Hammerfest, can process 18 million cubic metres (mcm) of gas per day when fully operational, typically delivering six LNG cargoes per month.

The delay comes as Europe is seeking additional sources of gas to alleviate a shortfall of imports from Russia and any further potential supply shock that could result from a Russian invasion of Ukraine. read more

"It's highly likely the market was counting on much of this volume coming to Europe from the start of April and assisting in the uphill task of once again filling very low storage sites over summer," Tom Marzec-Manser, head of gas analytics at ICIS, told Reuters.

European gas storages were holding 39% of their capacity as of Jan. 29, according to Gas Infrastructure Europe data.

The Hammerfest plant has been out of service since September 2020 following a blaze that raised concerns over safety practices.

At Melkoeya, gas is piped in from the offshore Snoehvit field, 160km (100 miles) away in the Barents Sea. The field was forced to shut as a result of the plant's closure.

Extensive work had been carried out since the fire, including checking more than 22,000 components and replacing 180 km (113 miles) of electrical cables, Equinor said.

The latest wave of coronavirus infections at times saw half of staff working at the site in quarantine and isolation but the project was now near completion, Hammerfest LNG plant manager Thor Johan Haave said.

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Reporting by Nora Buli; Editing by Terje Solsvik, Louise Heavens and Edmund Blair

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