Norway Approves Statoil's $981 Million Plan to Develop Reserves
June 14 2016 - 8:45AM
Dow Jones News
By Kjetil Malkenes Hovland
OSLO--The Norwegian government on Tuesday approved Statoil ASA's
(STL.OS) 8.2 billion-kroner ($981 million) Oseberg Vestflanken 2
plan, which is set to extend the life of the aging Oseberg field
center and provide much-needed work for the country's struggling
oil-service sector.
The field is estimated to hold 110 million barrels of oil
equivalent and will be worked with an unmanned wellhead platform,
remotely controlled from the Oseberg field center. Developed in
1988, Oseberg is one of Norway's biggest fields, with recoverable
oil and gas reserves estimated at 3.45 billion barrels.
Statoil said Oseberg Vestflanken 2 was the first of three phases
in a project to develop the remaining reserves in the area. The
project will be a key contributor to sustaining the company's
output in Norway at current levels until 2030, and extend the life
of the Oseberg field center, it said.
Statoil said it had reduced the project's break-even price--or
the price required for it to be profitable--by about 30%, but
didn't say from which level. The reduction was enabled by lowering
the project's capital expenditure and increasing the field's
volumes, which makes it more resilient to low oil prices, Statoil
said.
Brent crude traded Tuesday at $49 a barrel, less than half the
level before oil prices plunged in mid-2014.
The project's approval is good news for Norway's oil-field
service sector, where thousands of workers have been laid off due
to lower activity and rising competition for contracts, including
major downsizing efforts by Aker Solutions ASA and National Oilwell
Varco's Norwegian unit.
"This development generates activity and opportunities for
oil-sector suppliers with surplus capacity," said Tord Lien,
Norway's Minister of Petroleum and Energy. "Considering the
situation in the sector, it's very pleasing that the Oseberg
Vestflanken 2 development is commencing now."
The field is set to start producing by the second quarter of
2018.
Statoil is operator of Oseberg Vestflanken 2 with a 49.3% stake,
while state-owned holding company Petoro has 33.6%, Total has 14.7%
and ConocoPhillips 2.4%.
Write to Kjetil Malkenes Hovland at
kjetilmalkenes.hovland@wsj.com
(END) Dow Jones Newswires
June 14, 2016 08:30 ET (12:30 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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