Statoil Puts $32.5B Price Tag On Giant Sverdrup Oil Field

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Statoil's Johan Sverdrup field offshore Norway could cost up to $32.5 billion to develop, the company says.


OSLO, Nov 3 (Reuters) - Statoil's giant Johan Sverdrup oil field could cost as much as $32.5 billion, the company said in its first full estimate of the price tag to develop Norway's most expensive ever industrial project.

Discovered in 2010, Sverdup is the biggest North Sea find in decades, reinvigorating Norway's oil sector where production has been declining for more than a decade. At maximum, its production would equal nearly half of Norway's current oil output.

The hefty cost topped what analysts had expected, leading them to slightly downgrade the value of the project.

"In our model we have assumed 170 billion (crowns) full field development capex," Thomas Aarrestad, an analyst at Pareto Securities said. "Updating our model to 195 billion crowns, full development capex has a 3 percent negative impact on the net present value of the project."

Still, shares in several of the field's partners including Statoil, Lundin Petroleum and Det Norske rose as the plans indicated the project was on track, contained few surprises, and peak production could be hit sooner than previously predicted.

Statoil, like its peers around the globe, has been cutting capital spending this year to save on costs, but has given priority to Sverdrup as it is estimated to make money at less than $40 per barrel of oil, providing ample returns even if oil prices stay low.

The field could hold as much as 2.9 billion barrels of oil equivalents and produce up to 650,000 barrels per day at its peak in the 2020s. It is scheduled to start up in late 2019 with the second phase kicking in by 2022.


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Copyright 2016 Thomson Reuters. Click for Restrictions.


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