Statoil Renews Push into Arctic Oil Basins

WSJ Resize-01Wall Street Journal | September 6, 2016 | Kjetil Malkenes Hovland

Norway’s Statoil ASA said Tuesday that it was pushing deeper into the Arctic, shopping for Barents Sea drilling licenses in a bid to add resources and maintain output over the coming decades.

The 67% state-owned company said it had acquired stakes in four licenses in Norway’s far north from Tullow Oil PLC, after entering or boosting its holdings in five other Arctic licenses in the past months, through deals with companies including OMV AG and ConocoPhillips, at undisclosed prices.

“We’re doing this in a very countercyclical manner, meaning that we were able to pick up these licenses at what we consider to be very attractive terms,” Jez Averty, Statoil’s head of exploration in Norway and the U.K., told The Wall Street Journal in an interview Tuesday.

As part of the deal with Tullow, Statoil increased its stake in the 241-million-barrel Wisting discovery in the Hoop area of the Barents Sea to 35% from 15%, enlarging its footprint in one of the most promising provinces in Norway’s far north, Mr. Averty said.

“The Wisting discovery has opened up a new petroleum province in the Barents Sea,” he said. “What we’re looking to do is to establish ourselves as one of the leading companies in that area.”

As production in the mature North Sea depletes, the Barents Sea may hold the key to maintain Statoil’s output in the coming decades. The Arctic basin has been drilled since the 1980s, but at a slow pace. Companies are still hoping for huge finds in the Barents Sea, unlike in the North Sea where they are now mainly looking for smaller discoveries near existing infrastructure, Mr. Averty said.

Despite a disappointing drilling campaign in 2013 and 2014 to find additional resources near the Johan Castberg discovery in the Barents Sea, Statoil is pushing ahead with a significant drilling campaign in the sea area next year—including the northernmost well ever drilled off Norway in the Korpfjell prospect, 420 kilometers (261 miles) north of the northern coastline.

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