Offshore O&G: Cuts, Delays in Norway as Costs Soar

Posted by Greg Trauthwein
Thursday, April 24, 2014
Home: http://www.npd.no/en/Publications/Facts/Facts-2012/Preface1/

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

Offshore

3Si Group Launches Offshore Division

3Si Group, whose global portfolio of marine safety products and services covers commercial, leisure and military markets, has announced the formation of 3Si Offshore,

Rosneft, Gazprom to Receive Four Arctic Fields

Ministry of the Environment sent to the government documents on the transfer of "Rosneft" and "Gazprom" licenses for the development of four more fields on the Arctic shelf,

Edelweiss Now Controls Bharati Shipyard

Edelweiss Asset Reconstruction Company has taken over management control of Bharati Shipyard, says a report in ET.   Edelweiss now controls 70% of the Indian yard’s debts.

Finance

US Oil Drillers Cut Rigs as Crude Prices Collapse

U.S. energy firms cut a surprisingly sharp 13 oil rigs this week, the first drop in seven weeks, as a renewed slump in prices this summer forced drillers to make a second round of cut-backs.

Timing in Doubt on Hapag-Lloyd IPO

German container shipping group Hapag-Lloyd has taken further steps in preparation of a stock market listing and has mandated more banks for the move, but it remains

Asia Tankers-VLCC Rates Will See More Volatility

VLCC market to be "hot" in Q4 -VLCC broker. Freight rates for very large crude carriers (VLCCs) face a roller-coaster ride on uncertain cargo volumes and vessel

Energy

US Oil Drillers Cut Rigs as Crude Prices Collapse

U.S. energy firms cut a surprisingly sharp 13 oil rigs this week, the first drop in seven weeks, as a renewed slump in prices this summer forced drillers to make a second round of cut-backs.

Asia Tankers-VLCC Rates Will See More Volatility

VLCC market to be "hot" in Q4 -VLCC broker. Freight rates for very large crude carriers (VLCCs) face a roller-coaster ride on uncertain cargo volumes and vessel

Rosneft, Gazprom to Receive Four Arctic Fields

Ministry of the Environment sent to the government documents on the transfer of "Rosneft" and "Gazprom" licenses for the development of four more fields on the Arctic shelf,

Government Update

Timing in Doubt on Hapag-Lloyd IPO

German container shipping group Hapag-Lloyd has taken further steps in preparation of a stock market listing and has mandated more banks for the move, but it remains

Australia's New Shipping Laws Threaten Loss of Jobs

The planned changes to Australia’s shipping laws would cause a 93% loss of Australian seafaring jobs a new report says.   More than nine in 10 domestic seafarers

Proposed Shipping Legislation to Jeopardise$100-million Investment in Australia

Australian-owned Bass Strait shipping operator SeaRoad Holdings has warned the Federal Government that its proposed Shipping Legislation Amendment Bill could jeopardise

Offshore Energy

Rosneft, Gazprom to Receive Four Arctic Fields

Ministry of the Environment sent to the government documents on the transfer of "Rosneft" and "Gazprom" licenses for the development of four more fields on the Arctic shelf,

Russia’s Novatek Sells 10% Of Yamal LNG To Chinese Fund

Russia’s second-biggest gas producer Novatek is selling a 9.9 percent stake worth an estimated US$1.4 billion in its Yamal liquefied natural gas (LNG) project

Former CIA Spy Ship Becomes Victim of Oil Slump

A ship built by the CIA for a secret Cold War mission in 1974 to raise a sunken Soviet sub is heading to the scrap yard, a victim of the slide in oil prices.   Christened the Hughes Glomar Explorer,

 
 
Maritime Security Maritime Standards Navigation Port Authority Salvage Ship Repair Ship Simulators Shipbuilding / Vessel Construction Sonar Winch
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: 0.1951 sec (5 req/sec)