Det norske questions Johan Sverdrup alignment process

Det norkse oljeselskap Chairman Sverre Skogen has issued an open letter voicing his concerns over the distribution of interests in the Johan Sverdrup field development in the central Norwegian North Sea.

Offshore staff

TRONDHEIM, Norway – Det norkse oljeselskap Chairman Sverre Skogen has issued an open letter voicing his concerns over the distribution of interests in the Johan Sverdrup field development in the central Norwegian North Sea.

Skogen said Det norske oljeselskap wants to ensure that the project is not delayed. “It is quite possible,” he wrote, “for the [Petroleum and Energy] Ministry to approve the plan for development and operation (PDO) before the distribution of the deposits has been finally decided. The Ministry has itself given up its original linking of these two questions by considering the PDO before the distribution had been agreed.”

The decision will be taken independently of the proposal for distribution that Statoil presented prior to submission of the PDO. In Det norske’s view, Skogen said, this proposal does not result in a fair distribution of the deposits.

“We also believe that the Ministry has been pushing for a distribution based on volume rather than on value. The amount of oil in the ground is knowledge-based information, but the final outcome of the distribution will be decided in 2025 when the agreement is reassessed. By then, we will have more exact information about the field.”

Skogen pointed out that Det norske has repeatedly expressed concern about the process surrounding the negotiations and the fact that several of the partners “made no genuine attempt to agree on a solution. Among other things, we saw that the principle presented by ourselves and Petoro for a distribution based on volume and value was ignored in the final stages of the negotiations.

“At the meeting on Feb. 12, just before the deadline expired, the Minister asked Statoil to hold short bilateral meetings – without negotiations – with each of the companies and then to present a proposal for distribution. The minor adjustments made by the operator took very little account of the other two Norwegian companies’ views about placing greater emphasis on value in addition to volume.”

Skogen added that Petroleum and Energy Minister Tord Lien then summonedPetoro and Det norske (those questioning the distribution arrangement) to separate meetings, but did not request meetings with Johan Sverdrup’s other partners. After the discussion, Petoro accepted the proposals.

“For the general public – and for Det norske as the affected licensee – it would be interesting to know what ‘information’ Petoro was given by Statoil,” Skogen said.

“The distribution of ownership interests in Johan Sverdrup is now being considered by the Norwegian Petroleum Directorate (NPD) before the Ministry of Petroleum and Energy makes its decision. This is the last chance to put right everything that has been wrong until now. The most important thing for us is that the process must now be open and transparent, a view that the Ministry has fortunately listened to and confirmed in its assignment letter to the NPD.

“Furthermore, must all parties be given full freedom to present what it really believes is the correct distribution. Finally, it is of decisive importance that the prevailing distribution principle based on volume and value forms the basis for the decision, as the practice has been for big Norwegian oil fields.”

03/24/2015

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