(Adds reactions by oil agency chief, analysts and
* Increases estimate by 15 pct to 18.7 bln boe
* Eyes 1.9 bln boe in offshore border zone with Russia
* Sees more oil potential farther north
* Oilfields straddling Norway-Russia border a political risk
By Gwladys Fouche
OSLO, Feb 27 Norway has increased its estimate
for discoverable offshore oil and gas by 15 percent after
mapping out an Arctic zone bordering Russia and the seas off an
island near Iceland.
The Nordic nation, which lifted its estimate to 18.7 billion
barrels of oil equivalent (boe), is seeing a decline in its
current oil output and is looking northwards to rejuvenate it.
On Wednesday it said that about 1.9 billion boe could be
exploited in an offshore area the size of Switzerland in the
Barents Sea, the vast majority of which is gas, and believes
that there is potential for more oil and gas farther north.
The numbers increase by a third the estimated oil and gas
discoverable resources in the Norwegian side of the Barents Sea.
"This is very exciting. We are very happy that the results
are as promising as they look," Bente Nyland, the head of the
Norwegian Petroleum Directorate (NPD), which manages Norway's
oil and gas resources, told Reuters.
"This means that we have better possibilities for developing
the area with a long-term perspective."
Norway was able to map out the resources in the zone after
Oslo and Moscow resolved in 2010 a four-decade-long border
The authorities also mapped out for the first time the seas
around a speck of land called Jan Mayen, situated to the east of
Greenland and north of Iceland. There, there could be some 566
million barrels of oil equivalent, said the NPD.
Norway's oil production will fall to a 25-year low in 2013
as fields, particularly in the mature North Sea, become depleted
and new developments need more time to come onstream.
Companies that are have already made oil discoveries in the
Norwegian Arctic include Statoil, Total and
One drawback for energy firms is that most of the new
resources consist of gas - only 15 percent of the hydrocarbon in
the Norwegian part of the border zone is estimated to be oil.
"That makes it much less profitable (for oil firms)," said
Oddvar Bjoergan, an analyst at Sparebank 1 Markets.
Another analyst suggested that there was probably more oil
on the Russian side of the border but that it was expected the
Norwegian side would contain mostly gas.
"These are obviously big reserves," said Thina Saltvedt at
Nordea Markets. "It is very positive, not least for the
Norwegian oil industry."
Some of the potential oil and gas deposits straddle the
maritime border line between Russia and Norway, said the NPD.
"There is an obvious political risk there," said Saltvedt.
"What could happen is that these fields will be left alone for a
longer time while oil firms begin with the other fields."
The risk could be that an oil company working on one side of
the border "empties" a reservoir from oil and gas that lie under
the other nation's territory.
Similar issues have been resolved in the past, however. In
the North Sea, Britain and Norway have agreed how much resources
they can take out from fields that lie on either side of their
In addition, Russian oil companies need the technology and
experience to drill in challenging offshore areas, something
that Norwegian state-controlled firm Statoil already has.
Nyland at the oil directorate did not expect problems
regarding that question. "The agreement concluded three years
ago between Norway and Russia covers that issue," she said.
COULD BE OPENED IN TWO YEARS
Nyland added that oil licenses in the new areas could be
offered to oil firms in two years' time at the
At least one green group said the areas should not be opened
to oil drilling as Jan Mayen is a protected area for its sea
birds and marine life while the border zone is home to key
fisheries, such as cod and herring.
"These areas are very vulnerable and dealing with an oil
spill would be very challenging," said Arild Skedsmo,
conservation director at WWF Norway.
The NPD expected even more oil to be found farther north in
the border zone, which it would continue to map out this summer,
after conducting some surveys last year.
"The resource numbers from this area will increase further
the estimate for undiscovered resources," said the NPD.
Nyland did not have estimates for how much more oil and gas
there could be in that particular area.
It is not expected this area will be opened any time soon,
as it lies within the reach of polar sea ice. Norway has said it
would not drill where there is sea ice.
(Additional reporting by Joachim Dagenborg, editing by William