Statoil CFO: Norway Needs New Giant Oil Find Every Other Year
OSLO - Norway needs to make a new giant oil and gas discovery every other year for the next decade to offset falling production, Statoil ASA's Chief Financial Officer Torgrim Reitan told Dow Jones Newswires Wednesday.
"We expect the production on the Norwegian shelf to go on pretty well until 2020 or 2025, and after that it will fall," Mr. Reitan said in an interview at the sidelines of a parliament hearing on Norway's public financing needs up to 2060.
Norwegian group Statoil and other oil companies operating on the Norwegian continental shelf are key contributors to Norway's massive wealth. The country's oil and gas revenues were 372 billion kroner ($64 billion) in 2011. It has a $700 billion oil fund and no net debt.
But the high oil sector activity is likely to fade in the coming decade, Statoil warned, unless new acreage is awarded and new discoveries made. Norway's crude oil output has halved since 2000, although somewhat offset by higher gas output. Statoil expects the production fall to accelerate sometime after 2020.
"To illustrate the challenge, we need a discovery the size of Johan Sverdrup every other year to offset that fall. This is the size of the challenge. We need to open more areas," Mr. Reitan said.
Statoil has made "a couple of fantastic discoveries" in recent years, Mr. Reitan said, including Johan Sverdrup--one of Norway's biggest ever and estimated to hold 1.887 billion barrels--Skrugard and Havis. But these discoveries can't offset falling output from aging giant fields such as Ekofisk, Oseberg and Gullfaks.
The current record-high Norwegian oil sector activity "is to a large degree driven by discoveries that were made earlier and have become profitable with a higher oil price, and that were not profitable in the eighties and nineties," Mr. Reitan said.
Later this year, Norway is expected to open its first new acreage since 1994, in a formerly disputed area of the southeastern Barents Sea, next to the Russian border. The Norwegian Petroleum Directorate has estimated the area holds about 1.9 billion barrels of oil equivalent, slightly more than a year's worth of Norway's total oil and gas output.
But there is no guarantee the acreage will deliver the expected resources, Mr. Reitan warned.
"You never know an area before you open it, and that's also the case in the southeastern Barents Sea," he said.
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