* 1st phase of development seen costing $16-21 bln
* Oil, gas resources seen at 1.8-2.9 bln boe
* Previous estimate was in range of 1.7-3.3 bln boe
* Shares of Lundin, Det norske dive on news
* Scheme one of Norway's biggest industrial projects
(Adds analysts, shares, background)
By Gwladys Fouche and Ole Petter Skonnord
OSLO, Dec 20 Development of the North Sea's
giant Johan Sverdrup oilfield will be delayed by a year as one
of the biggest industrial schemes undertaken in Norway has
become more complex and costlier than thought, sinking some of
the partners' shares.
Norway's Statoil, Det norske and
Petoro, Sweden's Lundin Petroleum and Denmark's Maersk
Oil were expected to announce this month which type
of installation they would use to develop the field.
On Friday, they said they would announce it in early 2014.
Production will start at the end of 2019, rather than the
fourth quarter of 2018 as previously thought. The resource
estimate for the field was also lowered.
Johan Sverdrup is the most crucial project in the portfolio
of the firms concerned and the disappointment hit their shares.
"This is really bad. This reduces the present value of Johan
Sverdrup by some 20 percent," John Olaisen, an analyst at ABG
Sundal Collier in Oslo, told Reuters. "Twelve percent due to the
lower reserves and 8 percent due to the delay."
Several industry players have warned in recent weeks that
oil firms' development plans off Norway were too optimistic and
that they underestimated capacity constraints and rising costs.
Lundin Petroleum's shares were down 9.9 percent at 1009 GMT,
Det norske's were down 13.5 percent, and Statoil's were flat.
All lagged the European oil and gas index, up 0.41
Maersk Oil is a unit of shipping empire Maersk, whose shares
had less impact from the news. They rose 0.18 percent.
MORE COMPLEX, MORE EXPENSIVE
The first phase of the Johan Sverdrup project would cost
between 100 billion and 130 billion crowns ($16.2-$21.1
billion), partner Det norske said on Friday, which is more
expensive than anticipated.
In November, the head of Lundin Petroleum Norway told
Reuters an industry estimate of 50 billion crowns in investments
until 2018, the then starting year for production, was a "good
Capital expenditure until the attainment of peak output was
now estimated at $22-29 billion, according to Trond Omdal, an
analyst at Arctic Securities in Oslo.
"(This is) well above our $21 billion estimate and the
(consensus) for $22 billion," he wrote in a note to clients.
Statoil said the project had become more complex.
"Now that the concept has been more matured, we have a more
realistic picture of the complexity of the project," Statoil
spokesman Oerjan Heradstveit said. He declined to comment on the
The find came as a surprise when it was made in 2010.
Numerous wells had been drilled over decades in the area but
yielded little. In 1971, French oil firm Elf Aquitaine drilled a
well metres away from the field but missed it.
At the time of the discovery Statoil's exploration chief
gushed about the oil's "champagne-like" qualities, and the field
has rejuvenated the prospects of a mature oil region, once
written off by the world's biggest energy companies.
Norway's oil production has been on the decline since
peaking at 1.1 billion barrels in 2000. In 2013, oil output is
seen falling to 538 million barrels, from last year's 561
Johan Sverdrup contained between 1.8 billion and 2.9 billion
barrels of oil equivalent (boe), the partners said on Friday,
lowering the midpoint of the resources by 6 percent to 2.35
This could still make it the fourth-biggest oil discovery
made off Norway, the world's eighth-largest exporter of crude,
after Statfjord, Ekofisk and Oseberg. At 2.9 billion boe, it
would be the third-biggest.
The previous resource estimate for the field was 1.7-3.3
The partners still want to award a FEED (Front End
Engineering and Design) contract "as soon as possible in order
to ensure continued progress for the project", Det norske said
in a statement.
Norwegian offshore supplier Aker Solutions has
said it is working to secure contracts for the project. It will
face competition from suppliers in Asia and elsewhere.
The partners hope the development of the project can be
approved by the Norwegian parliament in the spring of 2015.
(Editing by William Hardy and Dale Hudson)