Statoil and Chevron Lead Pack in Securing Norwegian Oil Licences

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19 May 2016

Chevron, ConocoPhillips and Statoil have all secured licences to drill for oil off the coast of Norway, as companies target new resources to make up for losses elsewhere.

Some of the world’s biggest oil companies bid for rights in the country’s 23rd licensing round, which allocated areas in the Barents Sea, closer to the Arctic than before. Some are also in an area previously disputed with Russia.

On Wednesday, the Norwegian government announced it had granted 10 licences to a range of companies, with the country’s own domestic producers being among the biggest winners.

State-backed Statoil will become the operator of four of the licences, while Lundin, the Swedish company that discovered the Johan Sverdrup field in 2010, will take charge of three.

Other groups to win a stake in one or more fields include US oil companies Chevron and ConocoPhillips, as well as Centrica, the UK utility which is selling many of its oil and gas assets elsewhere.

Other multinational companies fared less well, however. Both BP, the international oil company, and Eon bid for licences but were not granted any.
Tord Lien, the Norwegian energy minister, said: "The Barents Sea offers great, new opportunities. The industry’s interest in new acreage shows that the Norwegian continental shelf remains attractive.

"The potential is huge. If the companies are successful in their exploration, northern Norway will enter a new era.”

The results show that large oil companies are still interested in exploring in new areas, despite the collapse in the oil price since 2014. Oil hit a low earlier this year of $28 a barrel, down from $115 two years ago. But in recent months prices have recovered slightly, with a barrel of Brent crude now trading around $50.

The North Sea is one of the oldest oil basins in the world, with oil output from Norway having fallen by half since 2000. But in recent years there have been more discoveries in the Norwegian part of the sea — including Johan Sverdrup — than in the British portion.

The latest push for exploration rights suggests that even though many companies have had to make heavy writedowns on their existing assets, they are still looking for new sources of revenue.

Victoria McCulloch, an analyst at RBC Capital Markets, said: "The big prizes in Norwegian oil are still in the Barents Sea — it is very under-explored.

But the move has also been controversial with environmental campaigners, who point out that Norway was one of five Nordic countries which recently agreed with the US to re-evaluate its drilling programme in the Arctic.

Truls Gulowsen, head of Greenpeace Norway, said: "New exploration licenses in the Barents Sea are in no way sustainable, either for the marine environment or the climate. Parliament should stop these licenses.”