OSLO (Thomson Financial) - Norwegian oil and gas group StatoilHydro ASA
confirmed that cost overruns of the budgeted 16.1 bln nkr renovation of its
Statfjord oil and gas field in the North Sea could amount to several billion
crowns.
"It's correct. There has been inflation since the project was begun in 2005.
A lot of this project is related to future production drilling which is impacted
by higher drilling rig rates and inflation in the sector," said StatoilHydro
communication chief Ola Morten Aanestad.
He said the company did not have exact figures.
"We are working on an update on costs so I do not have an exact figure," he
said, adding that an update could come in a couple of months.
However, he indicated that an estimate contained in a report earlier today
by Norwegian business daily Dagens Naeringsliv was not unreasonable.
DN reported that StatoilHydro may be "billions of crowns" over budget at
Statfjord compared with 16.1 bln original cost estimate given in June 2005.
"I think that is correct," Aaestad told Thomson Financial News.
"However I must point out that this is not money spent. This is money that
will be spent on production wealth in the future," he added.
DN, in a report on its website, said there was speculation from various
unnamed sources in the company that the new figure for the revamp could now be
closer to 18-19 bln nkr.
The project is being complicated by three old giant platforms which are
being reconstructed at the same time as production continues, DN reported.
Statfjord, which was discovered in 1974, is one of the oldest Norwegian
fields and the largest discovery in the North Sea.
About 150,000 to 160,000 barrels of oil per day are produced from three
platforms by the Statfjord Unit.
Oil is also produced form satellite fields tied back to Statfjord, bringing
total output from the platforms to 470-480,000 barrels a day.
StatoilHydro says the field is likely to remain in production until 2019.
According to StatoilHydro's website, it has 44.34 pct of the licence, with
other partners including ExxonMobil at 21.37 pct, ConocoPhillips at 15.17 pct,
and Shell on 8.55 pct.
patrick.mcloughlin@thomson.com
pm/slj
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