Norway's Offshore Oil Boom Is Back On
- Crude Oil
Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ andâ¦
Trending DiscussionsNorwayâs Offshore Oil Boom Is Back On
The rise in oil prices brought about the recovery of Norwayâs oil industry, with companies lining up plans to invest in boosting oil production on the Norwegian Continental Shelf (NCS)â"surely most welcome news for Western Europeâs biggest oil and gas producer, which faces a decline from the mid-2020s onwards if new large discoveries are not made soon.
Smaller oil firms, some of which are a result of recent mergers, plan to invest billions of dollars in Norwayâs offshore oil and gas over the next five years, launching an unofficial race to see who will become the third-largest oil producer in Norway behind state-participated companies Equinor and Petoro, and the largest independent non-state-held company operating on the shelf.
The three most likely candidates to become Norwayâs top independent producer could be investing a combined US$20 billion offshore Norway by 2022, accor ding to Bloomberg calculations.
These companies are Aker BP, the result of a 2016 merger between Aker and BPâs Norwegian unit; VÃ¥r Energi AS, the company that will emerge from the merger of Point Resources AS into Eniâs local unit; and Wintershall DEA, the company expected to emerge from the proposed merger between Germanyâs Wintershall and DEA.
Over the past year, Aker BP has been actively pursuing acquisitions offshore Norwayâ"it bought Hess Norge last year for US$2 billion, and two months ago it agreed with Total to acquire its interests in a portfolio of 11 licenses on the NCS for US$205 million.
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Aker BP has a portfolio with potential to reach production above 330,000 barrels of oil equivalent per day (boepd) from 2023 from existing discoveries, at a compound annual growth rate (CAGR) of 13 percent from 2017, the company said in its corporate strategy upda te earlier this year. This yearâs capital expenditure is set at US$1.3 billion.
VÃ¥r Energi ASâ"the company of the merger of private equity-backed Point Resources AS into Eni Norge AS, which is expected to complete by year-endâ"plans to invest more than US$8 billion over the next five years to bring projects on stream, revitalize older fields, and explore for new resources. The combined companyâs production for this year is estimated at around 180,000 boepd from a portfolio of 17 producing oil and gas fields from the Barents Sea to the North Sea. By 2023, VÃ¥r Energiâs production is expected to reach 250,000 boepd, with a breakeven price of less than US$30 a barrel.
Wintershall and DEA, whose proposed merger has yet to be signed and approved, plan to invest US$2.3 billion (2 billion euro) each in Norway. Wintershall plans to invest a total of around 2 billion euro in exploring and developing its fields on the NCS from 2017 to 2020, the company said earlier this year, noting that more than a third of Wintershallâs global exploration budget will be used in Norway.
âWith more than 100 licenses and shares in 20 producing fields, we could increase our joint production in Norway to over 200,000 barrels of oil equivalent per day in the near future,â Wintershall CEO Mario Mehren said about the new Wintershall DEA company, which, he noted, would be among the top five oil and gas producers in Norway.
The CEO of DEA, Maria Moraeus Hanssen, for her part, said at a conference in Stavanger last month that âAs part of our long-term growth strategy, we are investing more than two billion Euros in our development projects on the NCS.â
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Within five years, at least one of those three top contenders for Norwayâs largest non-state producer will surpass Franceâs oil major Total in terms of production, according to Bloomberg calculations. L ast year Total was the biggest producer in Norway behind state-participated Equinor and Petoro, with 214,000 boepd.
Lundin Petroleum could also join the race of smaller companies vying to become Norwayâs top independent producer, thanks to its 22.6-percent stake in the giant Johan Sverdrup oil field in the North Sea, slated to start production in late 2019 and expected to be the main contributor to Norwayâs rising oil production until 2023.
In its corporate presentation last month, Lundin said that its production in 2022, when Johan Sverdrup production will reach plateau, will be 160,000 boepd, double the 2018 production guidance of 78,000-82,000 boepd. Lundinâs production could even exceed 200,000 boepd by 2023, chief executive Alex Schneiter told Bloomberg.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ andâ¦More Info
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