Statoil shows faith in North Sea and Arctic prospects

Diana Raicu

Despite high break-even prices, the Norwegian energy giant is pushing the North Sea envelope

The Petroleum Safety Authority of Norway has green-lit Statoil’s plan for two drilling projects in the North Sea.

The majority state-owned company will be developing new sections of the Gina Krog and Valemon fields which were first drilled in 2015.

Drilling on Gina Krog will begin in September and Valemon in October.

north sea
Price dynamics and dependency

According to current calculations, half of the fields on the Norwegian continental shelf (NCS) are not profitable in the ~$50 per barrel price reality.

Yet sales of petroleum products represent a significant cross-section of the Scandinavian nation’s national economy.  

Norway is one the world’s largest oil and gas exporters and received NOK 127.9bn ($16.1bn) from petroleum activities in 2016.

Hydrocarbons revenue represents a 13 per cent share of Norway’s GDP and 36 per cent of total national exports. 

New frontiers

On August 7, Statoil spudded a well at the Korpfjell prospect in the Barents Sea, some 415km off the Norwegian coast and 37km from Russian territorial waters. 

Its northernmost drilling to date, Statoil suggest that Korpfjell might hold as much as ten billion barrels of oil, providing a windfall for the company in its Arctic endeavours.

Speaking in 2016, Jez Averty, Statoil’s senior vice president for exploration on the NCS declared that discoveries in the Barents Sea were “crucial to maintain the current NCS production level up to 2030 and beyond.”