Statoil Puts Arctic Exploration on Hold After Oil-Price Plunge

Statoil ASA, Norway’s biggest oil company, isn’t planning any wells in the Barents Sea this year, another sign explorers are turning away from the Arctic region after a plunge in crude prices.

“No exploration drilling is planned so far in the Barents Sea in 2015 from our side,” Morten Eek, a spokesman for the Stavanger-based company, said in an e-mail. Statoil will spend this year looking at data assembled during a record 12-well campaign in the Barents Sea in 2013 and 2014, he said.

Statoil, the world’s most active explorer in Arctic waters last year, in December also relinquished three licenses on the iceberg-ridden west coast of Greenland without having drilled a single well, citing high costs among other factors.

A plunge in oil prices to less than $50 a barrel from a $115 high in June is pushing companies from Statoil to ConocoPhillips and Total SA to rein in spending, putting pressure on already marginally profitable projects like Arctic developments. Statoil signaled earlier this month it may be forced to delay its Johan Castberg oil project in the Barents for a third time after its recent exploration campaign yielded insufficient new volumes to alleviate profitability concerns.

The state-controlled company is still planning a “strong” application in Norway’s current licensing round, which offers its northernmost blocks ever in a new area of the Barents Sea formerly disputed by Russia, Eek said.

Statoil’s head of exploration Tim Dodson said earlier today in an interview with Offshore.no that the company had no drilling plans for the Barents Sea this year. Statoil will keep exploration investment at a “reasonably high” level this year, he said earlier this month.

Royal Dutch Shell Plc, which said today it will cut $15 billion of investment over the next three years as it missed fourth-quarter earnings forecasts, is still committed to drilling for oil in Alaska. Europe’s biggest oil company has spent $6 billion searching for oil in the Arctic Beaufort and Chukchi seas, meeting setbacks that include a stranded rig and legal challenges.

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