(Reuters) Norway’s Statoil presented long-awaited investment plans on Tuesday for its Arctic Johan Castberg oil discovery, which is expected to cost 49bn Norwegian crowns (£4.38bn) to develop.
Statoil initially estimated a cost of more than NOK100bn for Castberg, making the field unprofitable at current oil prices, but had vowed to work with suppliers to reduce the investment.
In June, Statoil said revised Castberg plans would be presented by the end of the year.
Biggest development of year
“This makes the Johan Castberg project the biggest offshore oil and gas development to be given the go-ahead in 2017,” the company said, adding that it would be the sixth field to come on stream off the coast of northern Norway.
Partners in Castberg, which is believed to hold 450-650 million barrels of oil, are Statoil with 50%, Italy’s Eni with 30% and Norway’s state-owned Petoro with 20%.
As part of the announcement, engineering company Aker Solutions won a contract worth NOK4bn to build underwater systems and provide design and procurement services.
Essential for growth
“The field is essential for continuous production growth on the Norwegian continental shelf for Statoil from 2022 onwards,” Danske Bank analyst Anders Holte said.
“The field is one of the few remaining large developments offshore Norway and as such it’s important for the long term outlook for Statoil’s liquids production.”