Neil Dennis(Reuters) - French oil and gas major Total said on Monday it had agreed to sell its stakes in two Norwegian oilfields to Statoil for $1.45bn as it reviews its North Sea portfolio after acquiring Denmark’s Maersk Oil in August.
The company said Statoil will take over its 51% stake in the Martin Linge field and its 40% holding in the Garantiana discovery on the Norwegian Continental Shelf.
“The forthcoming acquisition of Maersk Oil... leads us to review our portfolio in this area so as to focus on the assets in which Total will be able to generate synergies and reduce their break-even points,” Arnaud Breuillac, Total’s head of exploration and production, said in a statement.
Norway remains strategically important
The company said that although Norway remains strategically important as one of the largest contributors to its output, it plans to focus on its non-operated assets such as Ekofisk, Snohvit and Johan Sverdrup fields.
Total's operations in the North Sea Martin Linge oilfield: Source - Total's corporate websiteTotal’s decision to scale back its presence in Norway, focusing on non-operated assets, follows a recent trend among foreign oil majors, including BP and Exxon Mobil, to become junior partners in Norwegian fields and concentrate their exploration and field management in less mature regions.
Some have gone even further, with US oil company Hess last month announcing the sale of its Norwegian assets altogether and plans to also divest from the Danish parts of the North Sea.
Martin Linge field
Total said there was limited scope for Total to improve operations in the Martin Linge field which was its only operated asset in Norway, while Statoil was in a better position to optimize the asset. The estimated recoverable resources of the field is in excess of 300 million barrels oil equivalent.
The Martin Linge development has been plagued by delays and cost overruns, with the latest investment estimate seen at NKr41.3bn ($5.1bn), about 42% more than originally anticipated.
The field is expected to start production in 2019 after a one-year delay following a fatal accident in May at a South Korean yard building the platform for the field, raising the cost for the project.
Total is also the largest investor in the Garantiana discovery, which is being developed.
Market reaction
In mid-morning trade on the Paris bourse shares in Total were up 0.29% at €47.48, while shares in Statoil were up 0.66% to NKr167.10 in Oslo.