Norway's Oil Sector May Face More Project Cuts, Delays

Posted by Michelle Howard
Thursday, April 24, 2014
Credit: Harald Pettersen - Statoil

More oil and gas projects in Norway could be put on hold because of rising costs, adding to a growing list of developments that have been delayed or called off, Bente Nyland, the head of the Norwegian Petroleum Directorate said on Thursday.
 


Most vulnerable will be small fields, projects to increase the recovery from producing assets, and new finds further than 40 km from existing infrastructure, Nyland told Reuters.
 


Oil firms are cutting back on capital spending across the world as years of cost inflation has squeezed margins, cutting back their ability to pay dividends.
 


Norway, where the per unit cost has increased 10-fold in 10 years has already fallen victim to cuts. Statoil earlier this year sharply reduced its investment budget while Shell this month called off a multi-billion dollar project to increase recovery at its Ormen Lange gas field.
 


Statoil's $15.5 billion Johan Castberg find in the Arctic, put on hold last year because of high costs, is also hanging in the balance but Nyland said she expected Statoil to eventually go ahead with the development.



"Increased costs will of course reduce the profitability of ongoing projects and might put a project on hold. The value of the future project will also be reduced," Nyland said.
 


"Costs are high and we know that companies have announced stronger investment discipline."
 


"We are afraid that this will cut some of the 165 (planned) projects to improve recovery and it might also stop the development of some of the 88 discoveries ... probably some of them will never be realized if this cost growth continues."



Increased oil recovery tends to be a low margin business and relies heavily on drilling new wells, a problem as drilling costs have doubled over the past decade.



With oil prices seen falling over the next two years and drilling costs staying high, spending on getting more out from fields can easily be abandoned, Nyland said.
 


"When the cost is increasing, you stop two things: exploration and increased oil recovery projects."
 


Developments in the Barents Sea in Norway's Arctic could also be at risk because they tend to be much further from shore than fields in the North Sea and the area lacks infrastructure.

 

(By Balazs Koranyi; Editing by David Evans)

Maritime Reporter May 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

WTO Launches Dedicated Website for new TFA Facility

The TFAF was created at the request of developing country and least-developed country (LDC) members to help ensure that they receive the assistance needed to

Aegean Marine Profit Beats Estimates

Greece-based Aegean Marine Petroleum Network Inc. (ANW) reported first-quarter earnings of $12.2 million or $0.25 per share compared with $5.1 million or $0.11 per share last year.

Shreyas Shipping Turns Around

Shreyas Shipping and Logistics swung to a net profit of Rs. 61.75 crore (about $9.6 million) in the fiscal year ended March 31, a big turnaround from its loss of Rs.

Energy

BMT, Endeavour Energy Win Africa’s LNG Import Terminal Contract

BMT Asia Pacific (BMT), a subsidiary of BMT Group Ltd, has been appointed Owners Engineer and lead design consultant by Endeavour Energy for the development

Fugro Extends Contract with McDermott

Fugro has been awarded a three-year extension to its existing contracts with McDermott Middle East, Inc. The contract covers the provision of survey, positioning,

Keel Laid for Russia’s Next Generation Icebreaker

The world’s biggest nuclear-powered icebreaker keel laying ceremony took place of at the Baltic Shipyard on 26 May 2015. Heads of Atomfflot, the Baltic Shipyard

News

BMT, Endeavour Energy Win Africa’s LNG Import Terminal Contract

BMT Asia Pacific (BMT), a subsidiary of BMT Group Ltd, has been appointed Owners Engineer and lead design consultant by Endeavour Energy for the development

Coast Guard Foundation Hosts Annual Tribute

The Coast Guard Foundation, a non-profit organization committed to the education and welfare of all Coast Guard members and their families, announced today that

WTO Launches Dedicated Website for new TFA Facility

The TFAF was created at the request of developing country and least-developed country (LDC) members to help ensure that they receive the assistance needed to

Offshore Energy

Fugro Extends Contract with McDermott

Fugro has been awarded a three-year extension to its existing contracts with McDermott Middle East, Inc. The contract covers the provision of survey, positioning,

First Damen Twin Axe for Offshore O&G

To develop its large fleet, Groen Offshore, Guard & Support has selected the first Damen Twin Axe Fast Crew Supplier 2610 to be customised with Offshore Oil & Gas standby capabilities.

Hoegh LNG Bags FSRU Deal in Chile

Oslo-based Höegh LNG said it has signed an Floating Storage and Regasification Unit (FSRU)contract with Chilean Octopus LNG for the Penco-Lirquén LNG import terminal to be located in Concepción Bay,

 
 
Maritime Contracts Maritime Security Maritime Standards Navigation Offshore Oil Pod Propulsion Salvage Ship Electronics Ship Repair Shipbuilding / Vessel Construction
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1676 sec (6 req/sec)