Tax uncertainties could delay next Barents Sea project

Statoil has recommended to partners Eni and Petoro to delay an investment decision for the Johan Castberg project in the Barents Sea.

Offshore staff

STAVANGER, Norway – Statoil has recommended to partners Eni and Petoro to delay an investment decision for the Johan Castberg project in the Barents Sea.

Uncertainties remain over the reserves and the required level of investment. In addition, the Norwegian government’s plan to “reduce uplift” in the country’spetroleum tax system could jeopardize future projects, particularly marginal fields or those requiring new infrastructure, said Øystein Michelsen, Statoil’s executive vice president for development and production in Norway.

Earlier this year, the PL532 license partners selected a development concept for the Johan Castberg project, 240 km (149 mi) northwest of Hammerfest, covering the 2011-2012Skrugard and Havis oil discoveries where combined reserves are estimated at 400-600 MMbbl.

They had considered building a new oil terminal at Veidnes outside Honningsvåg in Finnmark county, Norway, following the announcement that the state aid regulations would be applied to allow landing of oil and gas onshore in northern Norway, as was the case for the Snøhvit LNG project.

However, these plans were not presented as part of the proposal currently before the Norwegian parliament for approval. State aid will require further government approval, which adds uncertainty to Johan Castberg.

“The updated project estimates and the new uncertainty in the tax framework has made it necessary to consider what consequences this may have for the development concept,” Michelsen said.

Statoil is going ahead with a four-well exploration campaign in the area around the fields, the aim being to prove additional resources for the development. It also plans wells in other parts of the Barents Sea.

6/05/2013

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