Another Arctic oil project has been postponed with Statoil delaying the development of its Johan Castberg field in the Barents Sea.
The oil major, majority-owned by the Norwegian government, blamed Oslo in part for the delay, saying new tax increases announced last month had decreased the attractiveness of some projects.
The announcement is a big blow to the search for oil in the Arctic as the Norwegian Barents Sea is the one area where there has been success in drilling.
Statoil executives have said the Barents is considerably easier to operate in than Alaska or Greenland, where companies such as Royal Dutch Shell and Cairn Energy have spent billions of dollars but made little or no progress.
Statoil on Wednesday blamed uncertainties both on the amount of resources and investment needed at Johan Castberg, formerly known as the Skrugard and Havis discoveries and estimated to contain 400m-600m barrels of oil.
The Norwegian group had estimated it would cost about $15bn to build a new oil hub on Norway’s north coast, deep in the Arctic Circle, to develop the field.
“In addition, the Norwegian government has recently proposed reduced uplift in the petroleum tax system, which reduces the attractiveness of future projects, particularly marginal fields and fields which require new infrastructure,” said Øystein Michelsen, head of development and production in Norway for Statoil.
Norway itself is pinning its hopes to stem a decade-long drop in oil production in the Nordic country on new finds in the Barents Sea. It plans to sell 72 licences this summer to explore blocks in the sea to the north of Norway and is opening up its first new acreage in two decades after resolving a 40-year-old border dispute with Russia.
But the lack of infrastructure in an area 1,500km from Oslo is a concern for companies and Statoil had proposed an oil terminal at Veidnes, a town on the northern tip of Norway. Because state aid was proposed to be used for the project “significant uncertainty” had been introduced to the timing, Statoil said.
Statoil will this year drill four exploration wells in the area around Johan Castberg, which is located 240km off the Norwegian coast. It said its plans of producing 2.5m barrels of oil equivalent by 2020 – including 1.4m from Norway – remained unaltered by the delay.
Statoil is the operator of Johan Castberg with a 50 per cent stake, while Italy’s Eni has 30 per cent and Petoro, wholly owned by the Norwegian government, has 20 per cent.