Equinor, Aker BP, Vaar face rising project costs, Norway budget shows

The Norwegian government announced on Monday that Aker BP, Equinor and Vaar Energi had raised their estimates of costs for major oil and natural gas development projects in the Norwegian continental shelf.

The government's fiscal budget documents revealed that the cost of Equinor Johan Castberg is expected to rise from 80.3 billion crowns, which was estimated a year ago.

Aker BP’s Yggdrasil will likely cost 134.4 billion crowns compared to 120.2 billion crowns a year ago, and Vaar’s Balder Future is expected at 52.2 billion crowns compared to 44.5 billion crowns.

The company said that the Johan Castberg oilfield, located in the Arctic Barents Sea, is expected to begin production this year. This will be two years later than the original schedule and cost 76% higher than the initial estimate for 2018.

Vaar Energi is an independent subsidiary of Italy’s Eni. In August, it warned that Balder’s project costs will increase by 4.3 billion crowns in pre-tax due to the delay of its startup until 2025’s second quarter.

Balder's cost has more than doubled since an

initial estimate

19,6 billion crowns will be spent in 2019.

Environmental groups are challenging Aker BP Yggdrasil's Yggdrasil oil and gas project, Norway's biggest oil and gas development after the start-up of Equinor Johan Sverdrup's oilfield in 2019.

disputing

Its approval by the Energy Ministry.

However, the company has stated that the project approved at the end 2022 is on track to begin production in 2027.

Equinor owns 50% of Johan Castberg. Vaar Energi has 30%, and the Norwegian state-owned company Petoro holds the remaining 20%.

Aker BP owns the majority of Yggdrasil. Equinor, a Polish PKN-Orlen subsidiary, and PGNiG are also shareholders in different licenses.

Vaar owns 90% of Balder, and Kistos Energy holds the remaining 10%. $1 = 10.6472 Norwegian Crowns (Reporting and editing by Terje Solsvik).

(source: Reuters)