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Norway is the largest oil producer in Europe, and the second largest natural gas exporter in the world, but oil production is set to fall to a 25 year low this year, and with the North Sea oil wells in decline the country is desperate to try and develop new fields. The Arctic holds the greatest promise.
On Wednesday Norway invited international oil and gas companies to begin making bids for its first ever drilling licenses in its eastern Arctic waters, including the eastern Barents Sea.
The oil and gas firms interested have been given until the 14th January 2014 to submit their bids for the blocks that cover an area the size of Switzerland, and contain an estimated 1.9 billion barrels of oil equivalent, according to the Norwegian Petroleum Directorate.
The Barents Sea, where Norway is offering drilling licenses. (DeepSea Waters)
Only three years ago, in 2010, Norway managed to settle a 40 year old dispute with Russia over the location of its maritime borders in the Arctic. Some of the blocks offered in this auction will likely sit on fields that lie across the border, creating potential production problems for the companies involved.
Norway has stated that only a limited number of licenses will be awarded in the eastern Barents Sea, as the country wants to gradually, and carefully build up activity in the area, in order to reduce the risk of accidents, and keep production efficiency high. The second set of blocks will be offered near to the middle of 2015.
Earlier in the year Norway awarded 24 licenses to energy firms in the western Barents Sea, and already some huge discoveries have been made.
Statoil was the biggest winner in the earlier auction, taking seven part stakes, and three full licenses. Eni of Italy also won three full licenses, and Lukoil and Rosneft moved into Norway for the first time with their own stakes. Royal Dutch Shell, BP, ConocoPhillips, and Total were also awarded licenses to drill in the western Barents Sea.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com