Statoil Greenlights Key $6 Billion Norway Arctic Oil Project

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Statoil Greenlights Key $6 Billion Norway Arctic Oil Project


Category: Energy

Statoil ASA gave the final go-ahead to a flagship Arctic oil project after slashing costs by half.

While expected, the move by Norway’s biggest oil company is a boost to a region seen as key to arresting a decline in the country’s production.

In a striking illustration of how oil companies have adapted to lower prices, Statoil cut estimated investments at the Johan Castberg project to about 49 billion kroner ($6 billion) from an initial forecast of more than 100 billion kroner, it said on Tuesday, reiterating a figure given in June. The field in the Barents Sea is due to start production in 2022.

Castberg is the world’s biggest offshore oil project to get the go-ahead this year, with resources of 450 million to 650 million barrels, according to Statoil. The decision comes at a critical time for the industry’s Arctic ambitions. The Barents is thought to hold about half of Norway’s undiscovered oil and gas, yet Norwegians are increasingly debating whether further exploration makes moral or financial sense amid efforts to fight climate change.

 Castberg, made up of deposits discovered from 2011, is only the second oil project approved in the region. The first, Eni SpA’s Goliat field that started production last year, has come under intense scrutiny following delays, cost overruns and safety mishaps. The government is also facing a lawsuit from environmental groups challenging Barents license awards.
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Source: Bloomberg