The record-low oil price is now impacting two of the biggest oil fields in the Norwegian part of the North Sea and in the Barents Sea - fields for which the starving subcontractors had great expectations.
This involves the Johan Castberg field, which is projected to produce between 400 and 650 million barrels of oil, is being put on hold because the partners need more time to come up with a profitable development plan that can sustain the low oil price. And it involves the even bigger field Snorre 2040, which contains an estimated 1.6 billion barrels, says Statoil - operator on both fields - in a statement.
"Castberg and Snorre 2040 are two major and important projects in our portfolio, and it is important that we find sound and robust development solutions for them," says Ivar Aasheim, Statoil's senior vice president for field development on the Norwegian Continental Shelf.
The partnership behind Johan Castberg in the Barents Sea has decided to postpone the development to the second half of 2016. The partners expect to reach an investment decision in 2017.
"We have made significant progress in reducing costs for Johan Castberg. However, current challenges in relation to costs and oil prices require us to spend more time to ensure that we extract the full benefit of the implemented measures," says Ivar Aasheim.
This is not the first time that the partnership decides to postpone decisions concerning Johan Castberg. In the summer 2014 the partners, Statoil, Eni and Petoro, announced that they needed more time to complete the final concept solution for the field. Rumors surfaced already in February this year that the development would be expanded - and these rumors have now been confirmed.
As the oil price has dropped, Johan Castberg has several times been described as uncertain, as the field has a very high break-even price. Things look somewhat different for another prestige project, Johan Sverdrup, which estimates say can withstand an oil price as low as USD 30 per barrel.
Decisions in 2017
As for the Snorre field, the partners - Statoil, Petoro, ExxonMobil, Indemnitsu, RWE Dea and Core Energy - have decided to push the preliminary decision to the fourth quarter 2016. The field is complex and requires enormous investments in order to access the many resources under the ocean floor.
"Systematic work has taken place over several years to find the right solution for this project. The conclusion is that more time is needed for the owners to reduce investment costs and improve the understanding of the reservoir," says Statoil.
According to the new plan, the partners will present a final investment decision in the fourth quarter 2017, with production estimated to begin in 2022.