In what is considered as a setback for Norway, its state-owned oil company, Statoil, has just reduced the estimated volume of resources in the Johan Sverdup field, and delayed first production by a year. The Johan Sverdup discovery was Norway’s largest offshore find in decades, and gave hopes to the country’s oil sector, which has seen falling production for years.
Statoil has reduced reserve estimates to between 1.8 billion and 2.9 billion barrels of oil equivalent, compared to the initial estimates of 1.8 billion to 3.6 billion barrels. Production was delayed a year, and is now not set to begin until the end of 2019.
Alex Gheorghe, an analyst at RS Platou Markets AS, told Bloomberg via email, that it is “very disappointing to see both Statoil and the Norwegian Petroleum Directorate/government lose control of the situation, given the strong economics of the project and impact on Norway.”
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The field was discovered in two stages, with part found by Lundin in 2010, and the rest by Statoil in 2011. It is Norway’s third largest find ever, and could supply as much as 40% of the country’s crude oil by 2025, replacing the falling output from ageing North Sea oil fields.
Teodor Sveen Nilsen, an analyst at Swedbank First Securities, offered a possible explanation for this announcement to Bloomberg, explaining that this might “be a tactical game from Statoil. We think Statoil wants to increase its owner share in the field. Thus, we see no reasons why Statoil should talk up the value of Sverdrup.”
Oeivind Reinertsen, Statoil’s senior vice president for the project, has said that the delay in production is due to disagreements about the size of installations and the amount of initial investment to be made by the oil companies that share ownership of the field (Statoil, Petoro AS, and Maersk Oil). A concept selection for the Sverdup was expected by the end of the year, but an inability to come to any arrangement has forced that to be delayed until next year.
Torgeir Anda, from risk management company Det Norske, explained that “it’s a big project, a giant, a fantastic field. Spending a little more time must be OK. It’s only natural that it gets a little heated when you’re negotiating and agreeing on a field with so enormous a value.”
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