Thu. Oct 5th, 2023
    Costs For Equinor’s Arctic Oil Project Soar by $1.2 Billion

    Equinor, the Norwegian energy major, has announced that the costs for its Johan Castberg oil project in the Barents Sea have increased by $1.2 billion since last year. The project, which was approved in 2018, has experienced a significant rise in costs over the past few years.

    According to Geir Tungesvik, Equinor’s executive vice president for Projects, Drilling & Procurement, the increase in costs is due to a larger scope of work and industry cost increases. Despite the rising costs, Tungesvik emphasizes that Johan Castberg remains a financially viable project, with a breakeven price of around $35 per barrel. The project is expected to generate substantial revenue and have positive economic effects on the local community in the Barents Sea for the next 30 years.

    Equinor, along with its partners Vår Energi and Petoro, aims to begin production at Johan Castberg in the fourth quarter of 2024. The initial cost estimate for the project, submitted in 2017, was $5.3 billion. The updated estimate now stands at $7.4 billion, including an increase of $1.4 billion and currency effects of just over $648 million.

    Johan Castberg is estimated to hold between 450 and 650 million barrels of proven oil reserves. The project’s production vessel is designed to produce close to 190,000 barrels per day.

    In June of this year, Norway approved the development of 19 offshore oil and gas projects, with a total investment value of over $18.5 billion. This move reflects Norway’s commitment to sustaining high production levels from its continental shelf, and the projects include new developments, additional development of producing fields, and investments to increase resource recovery.

    – Original Article:
    – Author: Tsvetana Paraskova