Statoil Turns to Lundin to Make Arctic Development Profitable

Statoil ASA (STL), Norway’s biggest energy company, is seeking talks with Lundin Petroleum AB (LUPE) to link the Swedish explorer’s Gohta discovery to the Johan Castberg field in an attempt to make development profitable.

Statoil is canvassing whether developing the Arctic fields together will make both projects viable by reducing the cost of connecting them to shore via a pipeline, Lundin’s Norway head Torstein Sanness told reporters today in Stavanger, Norway.

“Statoil has offered us and others to participate” in discussions, Sanness said.

Statoil last year delayed Johan Castberg, citing costs and a tax increase by Norway’s previous government and shelved $15 billion of investments that included a new oil terminal at North Cape. It then in June again postponed a development decision after an exploration campaign that cost about 3 billion kroner ($485 million), aimed at boosting volumes and making the project more profitable, uncovered crude in only two of five prospects.

The talks, which are still at a “working level,” are aimed at finding a joint solution for infrastructure, Chief Executive Officer Ashley Heppenstall said in an interview.

“Clearly everyone wants to know how we can make this work,” Heppenstall said.

Statoil is still considering two options for Castberg, bringing the oil to a land terminal through pipelines, or loading it onto tankers at sea from a floating production unit.

To contact the reporters on this story: Mikael Holter in Oslo at mholter2@bloomberg.net; Stephen Treloar in Oslo at streloar1@bloomberg.net

To contact the editors responsible for this story: Christian Wienberg at cwienberg@bloomberg.net Jonas Bergman

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