Norwegian energy giant Statoil has put the brakes on a huge Arctic project.
The firm said yesterday it had delayed the £10.1billion Johan Castberg development in the Barents Sea because of tax increases planned by the Norwegian government.
Statoil said the proposed levy rise made the field more marginal, adding that a potential fall in state aid also created significant uncertainty for the project.
Statoil’s decision comes as other operators around the world reassess projects, particularly in the expensive Arctic region, in the face of falling oil prices and rising costs.
Oystein Michelsen, Statoil’s executive vice-president for development and production in Norway, said government proposals reduced the attractiveness of future projects, particularly marg-inal fields and ones that required new infrastructure, adding: “This has made it necessary to review the Johan Castberg project.”
Statoil said it would drill four exploration wells around Johan Castberg – made up of the Skrugard and Havis discoveries – in an effort to boost the project’s viability. It is thought the area could hold up to 600million barrels of oil.
Analysts said Statoil’s announcement was an attempt to put pressure on the Oslo government, but oil minister Ola Borten Moe played down the delay, saying: “I am confident that Johan Castberg will be built. It is an important project for Norway and for Statoil as well.”
Norway announced plans for its first oil tax change in two decades last month, saying it would cut the amount energy firms can write down on their investments and also limit the period for writedowns. Johan Castberg is not the first multibillion-pound project Statoil has delayed because of levy rises.
In March 2011, it halted work on its Mariner development in the North Sea after the UK Government’s £10billion tax grab on the industry.
With sister field Bressay, Mariner is one of the largest UK oil and gas projects yet to be developed, but work was put on ice for four months until the government introduced a tax concession to make it viable again. Statoil is now pressing ahead with work on the field, which with Bressay is expected to create up to 1,000 jobs out of Aberdeen.
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