Statoil to Invest $414 Million in Norway, U.K. Utgard Field

  • Statoil seeking further cost cuts ahead of 2019 output start
  • Norway government expects at least 2 more field plans in 2016

Statoil ASA submitted a development plan for the Utgard natural-gas and condensate field on the maritime border between Norway and the U.K. in the North Sea with investments estimated at 3.5 billion kroner ($414 million).

Production, which will be processed through the Sleipner platform, is expected to start at the end of 2019, Statoil said in a statement on Tuesday as it delivered the plan for development and operation to Norway’s Petroleum and Energy Ministry. The Stavanger-based company, Norway’s biggest oil and gas producer, had said in an impact assessment in April that investments would be between 4 billion kroner and 4.5 billion kroner.

“We have a level of profitability that’s attractive even at current oil and gas prices,” Atle Reinseth, a portfolio director at Statoil, said in an interview in Oslo following a press briefing. Statoil will seek to make further efficiency improvements that could cut costs even more, he said.

The plan, equivalent to a final investment decision, comes as Statoil and its rivals cut spending to weather a collapse in oil prices that has roiled the industry for two years. Norwegian authorities have warned producers, including the state-controlled oil company, not to forgo profitable resources as they become more selective. Statoil, which operates 70 percent of oil and gas production in Norway, has reduced planned investments in 2016 by 40 percent compared to a peak of $20 billion in 2014.

“It’s a demanding time for the industry,” Petroleum and Energy Minister Tord Lien told reporters. “This is an excellent example of the good work that’s being done to reduce costs and increase efficiency.”

The Utgard field, formerly known as Alfa Sentral, holds about 56.4 million barrels of oil equivalent in recoverable reserves. The field, which will be developed with two wells in a subsea concept, is expected to produce about 44,000 barrels of oil equivalents a day at full output, the ministry said in a statement

About 60 percent of the reserves in Utgard are located on the Norwegian side of the maritime border, where Statoil has a 62 percent interest. Grupa Lotos SA has 28 percent and Total SA 10 percent. Statoil owns all the reserves on the U.K. side. Statoil also submitted a Field Development Plan to U.K. authorities, it said.

Statoil has indicated it will submit one more development plan in Norway this year, for the 7 billion-krone Trestakk project. The Norwegian unit of DEA Deutsche Erdoel AG has said it will also submit a plan for the Zidane field this year.

“There’s reason to both hope and expect to receive more than one PDO before Christmas,” Lien said in an interview. “A lot of good work has been done, but there remains much good work to be done.”

    Before it's here, it's on the Bloomberg Terminal.