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Why Crude Quality Matters

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Norway Plans To Expand Arctic Oil Exploration Areas

Norway Drilling

Norway’s government is proposing to expand the area that will be offered for oil and gas exploration in the 2019 licensing round of acreage in mature areas, Petroleum and Energy Minister Kjell-Børge Freiberg said on Thursday.

Norway plans to include a total of 90 new blocks in the so-called APA annual licensing round this year, including 48 blocks in the Barents Sea, 37 blocks in the Norwegian Sea, and five blocks in the North Sea, Freiberg said.   

“It’s important to maintain the positive development in exploration activity in the Barents Sea. I hope this will lead to robust field development solutions and increased value creation in the north,” Reuters quoted Freiberg as saying in a statement.

There has been opposition to the extension of the acreage under the APA licensing round from politicians of the opposition and from environmentalists, who have argued that those licensing rounds with additional blocks are being used to expand exploration to beyond the scope of those rounds—that is mature and well-explored areas.  

In the 2018 APA licensing round, Norway awarded 83 production licenses—a record number of awards for such rounds.

“53 years after the first licensing round, this new record confirms the industry’s belief in continued value creation and activity in Norway,” Freiberg said in January this year, when he announced the new licenses and the 33 different companies that were awarded ownership interests.

Related: Two Largest Oil Price Benchmarks Are Set To Diverge

Norway’s oil production is expected to drop this year to its lowest level since 1988, but to recover afterwards thanks to two large developments.

Production is expected to jump in 2020 through 2023, thanks to the start up in late 2019 of Johan Sverdrup—the North Sea giant, as operator Equinor calls it.

But after Johan Sverdrup and after Johan Castberg in the Barents Sea scheduled for first oil in 2022, Norway doesn’t have major oil discoveries and projects to sustain its oil production after the middle of the 2020s.

The Norwegian Petroleum Directorate (NPD) started warning last year that from the mid-2020s onward, production offshore Norway will start to decline “so making new and large discoveries quickly is necessary for maintaining production at the same level from the mid-2020s.”  

By Tsvetana Paraskova for Oilprice.com

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