Lysaker, Norway, 23 December 2010 -- Norske Skog has signed a long-term contract with Statkraft for supply of power for the paper mill at Skogn, Norway. The contract secures continued operations at the mill, which needed a new long-term power supply contract by the beginning of 2011.
The new contract with Statkraft secures yearly supply of 0.8 TWh of electricity per year until 31 December 2022. The agreement takes effect on 01 January 2011. In addition to Norske Skog, the agreement is negotiated in cooperation with Finnfjord AS, which will secure power supply for its smelter at Finnsnes in northern Norway.
Most of Skogn's existing power contracts expire at the end of 2010, but a volume of 0.3 TWh will be available in 2011, in addition to the power being delivered from Statkraft under the new contract. This secures almost full coverage of electricity to Skogn in 2011. Purchasing of power in the spot market is expensive and unpredictable, and is not an alternative to a new, long-term agreement. Because of price differences between the energy market regions in Norway, it is not possible to use power sources from other parts of the country. Norske Skog has begun negotiations with Nord-Trøndelag E-verk (NTE) to meet Skogn's total electricity volume with a new long-term contract.
Norske Skog Skogn is one of the most environmentally friendly and efficient paper mills in Europe. A strong Norwegian currency and demanding market conditions throughout the industry means the mill needs access to stable and secure power supply at acceptable prices to maintain operations.
Statkraft and NTE can choose to take advantage of a new government guarantee scheme for energy intensive industry, which was passed by Stortinget (the Norwegian Parliament) on 17 December 2010. The scheme, which involves finance guarantees by the Norwegian Guarantee Institute for Export Credits (GIEK), reduces risk for the power suppliers. The scheme is not yet approved by EFTA Surveillance Authority (ESA).
Norske Skog Skogn employs 500 people. Production started in 1966. The mill produces newsprint, with the UK as the biggest single market.