• 5 minutes Oil prices forecast
  • 8 minutes Nuclear Power Can Be Green – But At A Price
  • 11 minutes Projection Of Experts: Oil Prices Expected To Stay Anchored Around $65-70 Through 2023
  • 16 minutes Europe Slipping into Recession?
  • 1 hour *Happy Dance* ... U.S. Shale Oil Slowdown
  • 21 hours U.S. Treasury Secretary Mnuchin Weighs Lifting Tariffs On China
  • 13 hours Chevron to Boost Spend on Quick-Return Projects
  • 12 hours Socialists want to exorcise the O&G demon by 2030
  • 11 hours Germany: Russia Can Save INF If It Stops Violating The Treaty
  • 7 hours Connection Between Climate Rules And German's No-Limit Autobahns? Strange, But It Exists
  • 3 hours Maritime Act of 2020 and pending carbon tax effects
  • 20 hours UK, Stay in EU, Says Tusk
  • 13 hours Conspiracy - Theory versus Reality
  • 1 day What will Saudi Arabia say? Booming Qatar-Turkey Trade To Hit $2 bn For 2018
  • 20 hours Regular Gas dropped to $2.21 per gallon today
  • 1 day German Carmakers Warning: Hard Brexit Would Be "Fatal"

Norway Tries to Encourage Arctic Oil & Gas Exploration by Awarding New Licenses

In an effort to try and encourage more exploration and development of oil in its northern regions, on Wednesday Norway awarded 24 new oil and gas exploration licenses, with most located in the Barents Sea, in the Arctic.

Norway wants to increase production levels, which are set to fall to a 25 year low, and granted licenses to heavyweights such as Royal Dutch Shell, BP, ConocoPhillips, Total, and Statoil, amongst others.

The Barents Sea has been estimated to hold as much as 7.9 billion barrels of oil equivalent, but the harsh weather, and lack of infrastructure make it a very expensive region to develop. To compound those cost fears, the Norwegian government has just announced plans to increase oil taxes, a move that could have drastic consequences on future investments.

Statoil has already delayed the development of its giant Johan Castberg field, as it reassesses the profitability of the project.

Related article: The Arctic is Thawing, but Hasn’t Released Trapped CO2

Oil Minister Ola Borten Moe claims that the tax regime is stable and supportive and should have little effect on investment decisions. “We still have a predictable investment-friendly tax framework; this was just an adjustment. Johan Castberg is a very large project and I think it will go through.”

However, industry analysts have not been as confident, concerned that the tax change may still cause a reduction in investment, and stating the fact that awarding 24 new licenses does not mean that development will follow. Anne Gjoeen, an oil analyst at Handelsbanken Capital Markets, said, “I actually find it hard to see anything positive when it comes to the Barents Sea now, in light of what has happened recently.

The Johan Castberg discovery initially attracted a lot of positive attention, now it turns out that even such a big oil find is not profitable to develop.

I am very unsure of the potential for profitability there (in the Barents Sea). The cost inflation is high compared to oil price assumptions.”

By. Joao Peixe of Oilprice.com



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News