By Marianne Stigset
May 8 (Bloomberg) -- Eni SpA, Italy’s biggest energy company, and StatoilHydro ASA got approval from Norway’s government to develop the country’s first Arctic oilfield.
The recommendation for the Goliat field, 85 kilometers (52 miles) northwest of Hammerfest on Norway’s northern tip, will be sent to parliament for approval, Oil and Energy Minister Terje Riis-Johansen said in Oslo today. The project is estimated to cost in excess of 28 billion kroner ($4.3 billion).
“The Barents Sea will be an important part of Norway’s petroleum industry going forward,” he said at a press conference. “We have a development in the Norwegian petroleum industry where oil production is falling. It’s falling fast.”
Norway, the world’s fifth-largest oil exporter, is opening more of its unexplored north to drilling as oil output sinks in the North Sea. Goliat, discovered in 2000, is estimated to hold 174 million barrels of oil, the government said today.
Eni is the operator and owns 65 percent, while StatoilHydro holds the rest. Should the parliament give approval, construction will start next year and production in 2013, according to an Impact Assessment Plan. The field is expected to be in production for 15 years, the ministry said.
Open For Exploration
StatoilHydro rose 3 kroner, or 2.2 percent, to 139.5 kroner as of 3:12 p.m. in Oslo, the third consecutive day of gains. Eni rose 58 cents, or 3.5 percent, to 17.27 euros.
About 25 percent of the recoverable resources on Norway’s continental shelf have yet to be discovered and only about 50 percent is open for exploration, according to the Petroleum Directorate. Norway’s Barents Sea may hold 1.03 billion cubic meters of oil equivalent in undiscovered oil and gas. About 53 percent is gas, equal to about five times Norway’s annual output, according to the directorate.
Norway awarded 21 new exploration licenses last week in the country’s 20th licensing round, including 9 in the Barents Sea, out of which 3 were to Eni. In total, 34 companies were awarded blocks, including Total SA, Exxon Mobil Corp., Chevron Corp. and Royal Dutch Shell Plc.
Off Limits
State-controlled StatoilHydro is the only producer in the Barents Sea, with the Snohvit gas field.
Norway is keeping parts of the Arctic off limits to protect the environment including areas in the Barents Sea as well as waters off Troms and Finnmark and the so-called Nordland 6 and 7 areas. Helge Lund, StatoilHydro’s chief executive officer, said in January that the best exploration opportunities lie in the Nordland and Troms areas.
The approval of Goliat will have no bearing on a decision whether to allow exploration in the northern areas of Lofoten and Vesteraalen, which is expected in 2010, Riis-Johansen said.
“The Lofoten and Vesteraalen area is special, most notably when it comes to the fishing industry’s interests,” the minister said. “The potential level of conflict is much greater than in other territories.”
Eni in February chose Sevan Marine ASA’s Sevan 1000 floating production, storage and offloading vessel, or FPSO, model for Goliat. The company still has to award contracts for engineering, procurement and construction of the vessel.
The company is holding off on awarding contracts in anticipation of lower service prices, Eni spokesman Jone Stangeland said in February. Producers are cutting costs because of the 60 percent plunge in crude prices since July’s record. Stangeland couldn’t be reached for a comment today.
Goliat’s “costs are at a whole different level than what we’ve seen for other projects” in Norway, Riis-Johansen said. “Therefore the vulnerability to fluctuations in oil prices will be completely different.”
To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net;
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