Equinor's new Arctic Oilfield will pay off $8 billion investment within 2 years

Equinor said that its Johan Castberg oilfield, located in the Arctic Barents Sea, began production Monday, after several delays. The company expects to recoup the 86 billion Norwegian crowns ($8.14 billion), which it paid for the field, in less than two year.

Castberg is now the second oilfield to come on stream in the Norwegian Barents Sea sector after Vaar Energi Goliat in 2016.

Equinor released a statement saying that the field would produce for at least 30 years, enhancing Norway's position as a long-term and reliable energy supplier.

It is estimated that the field holds between 450 and 650 million barrels worth of oil recoverable. The field has a production capacity of about 220,000 barrels a day.

Equinor stated that this is what they expect to happen in the second quarter 2025.

Geir Tunesvik, a senior Equinor executive, said without further explanation that "we expect this major field development... to be paid back in less than two-years".

Castberg's floating storage, offloading and production (FPSO) vessel has made several discoveries in the vicinity that it hopes to put into production. The company continues to explore this area.

Equinor owns 46.3% of the Castberg oil field, while Vaar Energi (controlled by Eni) and Norway's Petoro each have 30 and 23.7%.

The Norwegian government wants oil firms to explore the Barents Sea more, where authorities estimate that most of the country’s undiscovered petroleum reserves are located.

Environmentalists, however, have strongly criticized such plans because they are in contradiction with Norway's international agreements to reduce carbon dioxide emission.

Castberg was initially scheduled to begin in 2022. However, construction of the FPSO has been delayed because of the COVID-19 epidemic.

Bad weather in the area has delayed the start of Castberg.

(source: Reuters)