Norway: Statoil Must Proceed with Snorre Expansion

Norway's Statoil (STO) must move ahead with the delayed upgrade of the Snorre oil and gas field in the North Sea because it is a time-critical investment, energy minister Tord Lien said on Monday.

Statoil last month delayed a decision on the $4 billion upgrade of the Snorre field, which could yield an additional 300 million barrels of oil, as margins on the project were too low, particularly after the recent crude price drop.

"We have sent a clear message to companies involved that they must move ahead and produce the resources in the licence," Lien told Reuters on the sidelines of a conference. "We believe that this is definitely feasible and the resource can be realised."

Statoil now expects to decide in late 2016 whether to move ahead with building a new platform and extending the field's lifetime to 2040. If the project is continued, production could start in the fourth quarter of 2022.

Norway has pushed the Snorre licence to go ahead because the field has been in operation since 1992, so equipment is aging and any delay could reduce the recoverable resource before decommissioning.

Snorre shareholders include Statoil (33.3 percent), state holding firm Petoro (30 pct), ExxonMobil (17.4 pct), DEA Norge (8.6 pct), Idemitsu (9.6 pct) and Core Energy (1.1 pct).

Reporting by Camilla Knudsen