Lundin Favors Norwegian Contractors for Johan Sverdrup

Lundin Petroleum AB favors Norwegian suppliers to develop the Johan Sverdrup oilfield, the country’s biggest find in decades, after saving money employing a local contractor at its Edvard Grieg project.

“If they deliver on Grieg, they’re in a good position,” Torstein Sanness, Lundin’s managing director for Norway, said today in an interview. The company will discuss the matter with partners Statoil ASA, Det Norske Oljeselskap ASA and Petoro AS.

Lundin awarded topside-installation and steel-jacket work at the North Sea Grieg platform to Norway’s Kvaerner ASA at a time when several local offshore contracts were given to Asian companies, raising concern that the Nordic country’s oil-industry suppliers weren’t competitive.

Lundin may save more than 1 billion kroner ($163 million) at Grieg by contracting a Norwegian supplier, Sanness said in Stavanger. Timely delivery and higher quality can make up for lower prices at Asian competitors, he said.

The partners at Johan Sverdrup will announce their “concept” for the field by the end of the year. That can include decisions on platforms, fuel transportation and timeframes, as well as an updated resource estimate. Statoil has already indicated the platforms will have steel jackets and the oil will be processed at sea before being piped to shore.

The North Sea field, which may be biggest oil discovery off Norway since 1974 with as many as 3.6 billion barrels of crude, has helped revive interest in the country’s energy industry after a decade of falling production from aging fields.

Phased Development

Sverdrup will probably be developed in three phases, with production platforms installed one by one, according to Sanness. The start of output, scheduled for the end of 2018, may be pushed to early 2019, he said.

While Statoil, which holds stakes in the three licenses containing the field, is the project operator, Stockholm-based Lundin may end up operating the production phase, Sanness said.

Aker Solutions ASA, a Norwegian oil-service company controlled by billionaire Kjell Inge Roekke, said this month it expects the Sverdrup partners to award engineering work by early next year. Securing the order would be its most important future contract win, Executive Chairman Oeyvind Eriksen said.

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