Eni has written down the value of the Goliat oil field in the Arctic by $807 million, according to Norwegian media reports.
The online newspaper EDGAR.NO reported that the Italian oil and gas company made the decision to lower the value of its assets as the effects of the two-year oil and gas crisis continue to impact the firm's bottom line. Eni (NYSE:E) owns a 65 percent share in the venture, while the local company Statoil (NYSE: STO) owns the rest.
"The main reason is the low price of oil. We expect lower earnings from the field than we have previously assumed and therefore, we have written it down", Andreas Wulff, head of Eni's Norwegian communications said, according to the report.
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Goliat has faced several legal and financial obstacles in the past, which caused the oilfield's construction to be delayed by three years.
After approving an application for Eni to start Goliat's production by the end of February 2016, the Norwegian Petroleum Safety Authority (PSA) said it had to postpone the oilfield's start further until the violations found in previous audits had been rectified.
The report mandated that Eni declare and enforce a strict deadline in order to implement the corrective measures necessary as determined by the PSA.
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In March 2016, the field-which the operator claims is the largest of its kind and makes use of the most advanced cylindrical floating production storage offloading vessel (FPSO)-started production just after oil prices took a plunge a short two months before.
Goliat is also the first field to produce oil from the Barents Sea, which could hold up to 180 million barrels of oil. The ice-free region that hosts the 100,000-barrel-per-day operation sits 53 miles northwest of the city of Hammerfest.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on… More