Marathon Oil’s Symphony pipeline has no investors

Michael Wang, Dow Jones Newswires

Marathon Oil Corp.’s proposed $1.3 billion Symphony pipeline development connecting Norwegian natural gas fields to southern England is looking doubtful. After five months of marketing, the Houston energy company has failed to attract a single investor.

But Houston-based Marathon remains hopeful its blockbuster pipeline will go ahead, even if it means ceding control of it to another oil company.

The energy company announced the Symphony pipeline system last February, in a bid to carve itself a leading role in the supply of Norwegian gas to the British market, the world’s third-biggest by consumption.

There’s already one pipeline running to Britain from Norway — the Vesterled line with a capacity of 11 billion cubic meters — which is considerably underused, ferrying only about 1.5 bcm to 2 bcm a year.

But Britain, Norway’s North Sea neighbor, is forecast to lose its self-sufficiency in oil and gas from late 2005 and quickly become a major importer thereafter, so pressure is building for new projects. Annual consumption in Britain is about 100 bcm.

Marathon’s campaign to lure investors began in May. In July, it dramatically increased the pipeline’s planned gas capacity to between 18 billion and 24 billion cubic meters a year — roughly a fifth of Britain’s current consumption — from an initial 10 bcm.

But, despite considerable effort, the company admits it has so far come up empty-handed in its pursuit of investors — ideally one from Norway and one from Britain — to help bankroll the project.

BP and Royal Dutch/Shell Group, Britain’s top heavyweights, have also recoiled. BP says it prefers current North Sea pipeline infrastructure — much of which it owns and operates — to be used, while Shell says it has not received a reply to “technical and financial questions” about the project.

Marathon is playing down the lack of interest as a deal-killer, saying bilateral talks continue.

“Negotiations aren’t finished until they are finished,” said Bill Hastings, chairman and managing director of London-based unit Marathon International Petroleum Ltd.

He conceded that the project won’t go ahead unless two major energy companies sign up, hinting that their origin needn’t be within Britain or Norway. “I don’t think any single party can do this by themselves, us included.”