Norway To Halt Production at Some Fields to Meet Quota

Norway will have to halt production at some of its fields and reduce output at others to avoid going over the limit promised to OPEC for the first quarter. "Several oilfields on the Norwegian continental shelf must reduce output and some will even have to close," Sissel Edvardsen, spokeswoman at Norway's Oil and Energy Ministry, said. She added that more than 20 fields would be affected.

Non-OPEC Norway, the world's third largest oil exporter after Saudi Arabia and Russia, has said it will cut output by an average 150,000 bpd from a forecast 3.17 million bpd in the first half of 2002 in an OPEC-led drive to underpin prices.

But figures for January and February showed average production of 3.12 million bpd for Norway, overshooting the target by 100,000 bpd and meaning oil output has to average 2.83 million in March.

Henrik Carlsen, head of production for Statoil's, said oil had been flowing at full capacity despite the curbs but that it would comply with the cuts. The company kept pumping at normal rates for as long as possible, fearing that it might fail to fill the available quota if technical problems or storms forced unexpected closures. "We go flat out all through the quarter until about the last two weeks before the quarter ends, then we start to reduce according to the limit each field has been given by the (oil) ministry," he said.

That would mean Norway's total production can only be about 2.70 million barrels for the last two weeks of March to reach the 3.02 million average for the three-month period. Halting output at some fields could be the only solution.

The oil ministry said it could impose harsh sanctions for any non-compliance with production quotas, but added that it regarded any dispute over output as very unlikely.

"It has never happened that a company has broken a production quota set by the government," a ministry spokeswoman said. In June 1990, for instance, Norsk Hydro shut its Oseberg field for 10 days to comply with an ordered cut. Statoil's Carlsen said that North Sea operators would bite the bullet and stick to the government quotas rather than risk a fall-out with Oslo. "The government has said that (oil companies) are allowed to produce 3.02 million barrels on average in the first quarter, and we will produce 3.02 million barrels," Carlsen said.