Oil crash risks further delay for Statoil's Castberg project
Oil crash risks further delay for Statoil's Castberg project
MIKAEL HOLTER
OSLO, Norway (Bloomberg) -- Statoil could be forced to delay its Johan Castberg project in Norway’s Arctic waters for a third time after oil prices dropped by more than half since June.
“It remains to be seen whether we’re able to come up with a good enough solution within the timeframe that’s been set,” Eldar Saetre, Statoil’s acting CEO, said in an interview in Oslo. “There’s a situation that forces us to make tough prioritizations.”
Norway’s biggest energy company delayed Castberg for a second time last year after disappointing exploration results in the Barents Sea failed to boost the profitability of the project, which the Stavanger-based explorer says was already challenged by rising costs and a tax increase. The state-controlled company said in November it plans to present a development concept for Castberg in July.
Brent crude, the European benchmark, has dropped from $115/bbl in June to less than $52/bbl, prompting oil companies to reconsider projects around the globe. Arctic oil fields such as Castberg, which are already expensive because of a lack of infrastructure and harsh conditions, are especially vulnerable.
Castberg is still profitable at prices below $80/bbl, Statoil said in November. Rystad Energy AS, an Oslo-based industry consultant, has said the break-even price for a standalone development of Castberg, which would exclude earlier plans for a new land-based oil terminal, is $60 to $70/bbl.