Statoil Reviews Snorre Recovery Project on Higher Norway Taxes
Statoil ASA (STL), Norway’s biggest energy company, may delay an investment decision on its Snorre increased-recovery project as it seeks cheaper options after the government unexpectedly increased taxes.
The Stavanger-based company last year said it planned to build a new drilling and processing platform at the North Sea’s Snorre field to extract an extra 300 million barrels of oil and extend output until about 2040.
“We have to revisit the project, to look at concepts and make a new evaluation,” Chief Financial Officer Torgrim Reitan told reporters in Oslo today. “It’s too early to say” if an investment decision will be made in 2015 as planned, he said, declining to comment further.
Statoil last year postponed its Johan Castberg oil project in the Barents Sea, citing among other reasons a tax change by Norway’s previous Labor-led government that limited the deductions companies can make. Statoil then cut planned spending by 8 percent for the next three years and signaled it will be more selective about which projects to invest in.
The spending-plan cuts have resulted in warnings from authorities that Statoil must maintain its project plans.
Petoro AS, which manages the state’s direct ownership in oil and gas fields and is a partner at Snorre, said last month that the cuts, coupled with rising industry costs, will create delays and may endanger projects. Increased-recovery projects like Snorre 2040 are particularly at risk, Petoro Chief Executive Officer Grethe Moen said at the time.
Statoil has a 33.3 percent stake in the Snorre field, according to data on the Norwegian Petroleum Directorate’s website. Petoro holds 30 percent, Exxon Mobil Corp. (XOM) 17.4 percent, Idemitsu Kosan Co. 9.6 percent and RWE Dea AG 8.6 percent. Core Energy AS has 1.1 percent.
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