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New Oil & Gas Discovery In Mature Area Of Norway’s North Sea

Norway Rig

The partners of a license in a mature area in Norway’s North Sea have struck oil and gas close to the Gjoa field, the operator of the license, French company Engie, said on Friday, noting that the area still holds development potential.

Engie’s Norwegian unit, Engie E&P Norge AS, estimates that the discovery holds between 25 million barrels of oil equivalent (boe) and 70 million boe. Engie E&P Norge holds a 30 percent share in the license, and its partners are Tullow Oil Norge AS with 20 percent, Idemitsu Petroleum Norge with a 30-percent stake, and Wellesley Petroleum AS with a 20-percent share.

The partners will explore the possibility of linking the discovery to existing infrastructure at the nearby Gjoa field, which is expected to reduce both timing and costs of a future development, Engie Norge’s managing director Cedric Osterrieth said in the company statement.

The North Sea, however, remains an expensive venture in the current ‘lower-for-longer’ crude price environment. Even if Statoil (NYSE:STO) has recently said that its giant Johan Sverdrup oil field will now have a break-even price of US$25 per barrel, analysts reckon that this is an atypical field and therefore not indicative of either the Norwegian or the UK average development costs.

The announcement of the latest discovery in Norwegian waters in the North Sea came a day after the country’s statistics office said that Norway is poised for an economic shift following the oil industry slump.

Investments in the petroleum industry have dropped by 34 percent so far this year from the 2013 peak, the office said. Investments fell by 3.7 percent in the second quarter of 2016; still, this was a lower decline than in the previous four quarters, in which investments had dropped by more than 5 percent on average. As far as oil prices are concerned, they are expected to gradually rise from under US$50 in the first half of this month to US$60 by the end of 2019.

The office said that it expects the decline in oil investments to considerably slow down next year, and to slightly grow in 2018 and 2019.

By Tsvetana Paraskova for Oilprice.com

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