Statoil to Consider Early Shutdown of Norwegian Field
Veslefrikk (Photo: Statoil)
Statoil could bring forward closure of its Veslefrikk offshore oil and gas field because of low profitability as a result of the protracted downturn in crude oil prices, the Norwegian company said on Wednesday.
The company said it is working on plans to shut production at the North Sea field two years earlier than previously flagged, citing the 70 percent fall in the price of Brent crude since June 2014.
"The field is at the tail end of production and low prices are challenging profitability," a Statoil (STO) spokesman said.
"We are considering shutting Veslefrikk some time in the period 2018-2019, depending on the market development and production volumes."
The original plan was to shut Veslefrikk in 2020.
Statoil did not detail the cost of production at Veslefrikk, but Norway's giant Johan Sverdrup field -- forecast to have among the lowest production costs on the Norwegian continental shelf -- is expected to need oil at $30 to $40 to break even when it begins operating around 2020.
Veslefrikk, which has been in operation since 1990, produced 2.8 million barrels of oil last year and only a fraction of Norway's total gas output. The 343 million cubic metres of gas produced last year was equivalent to one day of Norway's winter output.
Statoil did not comment on potential decommissioning costs but said it planned to make a final decision on the field in the second half of this year.
Statoil is Veslefrikk's operator and holds an 18 percent stake in the field. The other partners are Norway's Petoro, Spain's Repsol, Germany's DEA and BASF-owned Wintershall.
(Reporting by Nerijus Adomaitis)
