Statoil ASA (STL), Norway’s biggest energy company, again delayed a development decision for the Johan Castberg project in the Arctic Barents Sea as the company considers a possible joint venture to lower costs.
Statoil will look for ways to finance a pipeline to shore and a terminal for the development as it over the next year implements “a number of measures in order to reduce costs,” the Stavanger-based company said. A new concept will be determined in “summer” of 2015, it said.
“The exploration campaign has proven less new oil resources in the Castberg area than expected,” said Arne Sigve Nylund, executive vice president for development and production. “We’ll do everything possible to cut costs, to make the project as cheap and robust as possible.”
Statoil and partners Eni SpA and Petoro AS were planning to present a decision on a concept by this summer after postponing the project last year because of rising costs, a tax increase and doubts on available resources. An exploration campaign that cost about 3 billion kroner ($490 million), aimed at boosting volumes and making the project more profitable, uncovered crude in only two of five prospects.
The company is leaning toward a floating production storage and offloading concept for Castberg, which is about 10 billion kroner cheaper, Nylund said. It’s also seeking out companies and licenses operating in the area to form a joint venture, he said. Statoil will consider that possibility after getting feedback by this fall, he said.
“Johan Castberg alone doesn’t have the possibility to carry the pipeline and terminal solution alone,” he said in a telephone interview.
Castberg has proven volumes of 400 million to 600 million barrels of oil, according to Statoil.
Statoil in February refocused its strategy to prioritize returns over production growth amid rising costs, cutting spending plans over the next three years by $5 billion. It is also preparing to deepen those cuts toward 2020, according to internal documents seen by Bloomberg News.
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