Lotos Wants SBM Offshore to Remove Yme Oil Platform, CEO Says

Grupa Lotos SA (LTS), the Polish refiner with a stake in Yme oil field, wants the owner of the evacuated platform on the project off the shore of Norway to remove the facility to speed up the start of crude production.

Canada’s Talisman Energy Inc. (TLM), the operator of the project, should ask SBM Offshore NV (SBMO), the owner of the platform and the world’s largest supplier of floating oil and gas production facilities, to fix the platform onshore or build a new one, Lotos Chief Executive Officer Pawel Olechnowicz told reporters in Warsaw today.

“We hope the platform is soon taken from the sea,” Olechnowicz said.

Lotos, which had originally planned to get 100,000 tons of oil a quarter from Yme starting in 2010, wrote down 934.6 million zloty ($286 million) of the investment’s value and said today output will begin in 2015. The writedown pushed Lotos to post the biggest quarterly loss in two years.

Talisman last month evacuated all 140 people from the Yme platform after receiving no assurances from SBM that cracks found in the steel structure in May were not hazardous, Andreas Middlethon, a spokesman for Talisman, said on July 12.

Middlethon said then Talisman could replace the facility if SBM doesn’t come up with a plan to fix it.

“The work that remains to be done on Yme is of many different kinds,” Middlethon said by phone today. “Should the platform be taken to land, a lot of this work would be easier done on land,” he said.

“We would highly appreciate it if SBM would provide a plan for further development at Yme within the end of the year,” the spokesman said, adding that towing of the platform back to the shore won’t be possible before 2013.

The decision to remove the platform will be “the most difficult one,” Lotos Deputy CEO Zbigniew Paszkowicz told reporters today. “According to our estimates the whole project could still be economically viable” if the platform is removed and repaired onshore or replaced with a new facility.

The same repair work takes 1.7 times more on the sea than in the shipyard and nobody has been working on the platform since July 10, Paszkowicz said, adding that Talisman is waiting for independent reports before making the decision.

To contact the reporters on this story: Maciej Martewicz in Warsaw at mmartewicz@bloomberg.net; Mikael Holter in Oslo at mholter2@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.