* Says Johan Castberg should have a plant on land
* Petoro manages Norway state's interests in offshore fields
OSLO, May 8 (Reuters) - Energy firms need to halve the costs of drilling for oil and gas off Norway and drill twice as many wells per year to prolong the country's oil and gas production, a state-owned oil firm said on Thursday, underscoring the challenges facing the industry.
Years of cost inflation in the oil sector have squeezed energy firms' margins, leading to several projects being put on hold, such as Statoil's $15.5-billion Johan Castberg oilfield in the Arctic.
"Petoro wants to double the number of wells and to halve the costs per well to realise the full value potential of the Norwegian state's stake in both existing fields and discoveries," the state-owned firm said on Thursday.
Petoro has no operations of its own but manages the Norwegian state's direct ownership stakes in offshore oil and gas fields and participates in most oil and gas fields off Norway.
"I'm confident that, through simplification, technology (that) increases cost effectiveness and a cultural shift away from seeking fault-free operation to pursuing efficiency, we can achieve radical efficiency gains," Petoro chief Grethe Moen said in a statement.
On Johan Castberg, Petoro said Statoil and partners should go ahead with building a plant on land to process the oil, rather than a floating offshore installation, as it would ensure there are installations available to process oil from potential new discoveries in the Norwegian Arctic.
"The way we develop Johan Castberg will hold great significance for how we develop large swathes of the Barents Sea," said Moen.
"We hold stakes in several licenses in the north of Norway and we want to have infrastructure that ensure the profitability of these projects."
Statoil is the operator of Castberg and has a 50-percent stake. Italy's Eni has a 30-percent stake while Petoro holds the remaining 20 percent. (Reporting by Gwladys Fouche; Editing by Mark Potter)