Statoil Johan Sverdrup oil field development costs down by 20 per cent, output increased
STAVANGER, Norway, Aug 29 (Reuters) – Norwegian oil major Statoil said on Monday it had cut development costs by about 20 percent for the first stage of its giant Johan Sverdrup oil field, while sharply raising the expected output.
The initial phase of the North Sea’s largest oil discovery in more than three decades is now expected to cost 99 billion Norwegian crowns ($11.96 billion), down from an original forecast of 123 billion crowns, Statoil said.
Output from the first stage has now been estimated at 440,000 barrels of oil per day, well above the 315,000-380,000 barrels per day the company predicted earlier, confirming earlier estimates given by partner Lundin Petroleum of Sweden.
“We are now seeing the results of good cooperation between Statoil, its partners and suppliers. We are strongly reducing investment costs, and we are increasing the process capacity, resource estimate and value of the field,” Statoil Chief Executive Eldar Saetre told a news conference.
“We have further improved the truly world-class project of Johan Sverdrup.”
The break-even price for the whole project was now below $30 per barrel – $25 for the first phase – and it would be possible to bring it down even further, said Statoil.
“We are still working on this. We see simple things which we can do to reduce the uncertainty further,” the firm’s head of technology, projects and drilling, Margareth Oevrum, told Reuters.
The overall cost of Sverdrup, including the second stage of the development, was lowered to a range of 140 billion crowns to 170 billion crowns from 170 billion-220 billion crowns previously. The start-up date is the same: late 2019 for the first phase and 2022 for the second phase.
When fully developed, the field is expected to have a production capacity of 660,000 barrels of oil per day, an increase from the 550,000-650,000 barrels per day seen initially.
Statoil is the operator of the field with a stake of slightly more than 40 percent.
Sweden’s Lundin holds 22.6 percent, Norway’s state-owned Petoro 17.36 percent, Norwegian firm Det norske 11.57 percent and Denmark’s Maersk 8.44 percent.
Shares in Statoil were down 0.15 percent at 0734 GMT, Lundin Petroleum’s were up 0.85 percent, Det norske’s were down 0.18 percent, Maersk were up 0.15 percent. All were outperforming a European oil and gas index down 0.61 percent.
(Reporting by Gwladys Fouche and Stine Jacobsen in Stavanger; Editing by Biju Dwarakanath and Terje Solsvik)