Page 6 - Euroil Week 40 2019

EurOil COMMENTARY EurOil
Johan Sverdrup megaproject sees early launch
Johan Sverdrup was cited as the saviour of Norway’s services industry during the market down
NORWAY
WHAT:
With Sverdrup’s launch, Norway’s output is set for substantial growth.
WHY:
The eld will be owing 440,000 bpd by next summer.
WHAT NEXT:
The project has strong economics, partly because its investors were able to cut good deals with contractors when oil prices were low.
NORWAY’S state-owned Equinor started pro- duction over the weekend at the Johan Sverdrup megaproject, set to deliver a major boost to national oil output over the coming years.
e eld was discovered in 2010 some 160 km west of Stavanger in an area of the North Sea that had overlooked by most explorers. With an estimated 2.7bn barrels of oil equivalent, accord- ing to Equinor, it marked the largest nd o Nor- way since the 1970s.
A er initial delays as a result of the oil mar- ket downturn, Equinor and its partners green- lit Johan Sverdrup’s development in 2015. Its launch has cost NOK40bn ($4.4bn) below the cost estimates made at the time, and more than two months ahead of schedule, according to the Norwegian operator.
“Johan Sverdrup coming on stream is a momentous occasion for Equinor, our partners andsuppliers,”EquinorCEOEldarSaetresaidin a statement on October 5. “At peak, this eld will account for around one third of all oil produc- tion in Norway and deliver very valuable barrels with record low emissions.”
By next summer the eld is set to be produc- ing 440,000 barrels per day – equivalent to 33% of Norway’s production levels in the rst half. A
spike like this has not been seen in decades in the country, whose basins are mostly mature. e initial phase will cost NOK83bn ($9.1bn) to implement, and will be followed by a second $4.5bn phase beginning in the fourth quarter of 2022, that will raise output to 660,000 bpd.
Equinor holds a 42.6% operating stake in the eld, a er securing an extra 2.6% share from Sweden’s Lundin Petroleum in August. Lundin now holds 20%, while Norway’s Petoro and Aker BP hold 17.4% and 11.6% and France’s Total 8.4%.
Impact
It is hard to overstate Johan Sverdrup’s impor- tance for both Norway and its investors. Its approval in 2015 paved the way for billions of dollars in contracts to Norway’s o shore services rms, at a time when many were struggling to stay afloat. As former Petroleum and Energy Minister Terje Soviknes put it last year, Johan Sverdrup “rescued us” from a “mega-crisis.”
The project should contribute $100bn to Norway’s state budget over the next 50 years, according to Sverdrup, and help li output from a 31-year low this year. It will be a key driver of growth over the coming years for Equinor,
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w w w . N E W S B A S E . c o m Week 40 10•October•2019