* Norway awards 24 licenses to 29 companies
* Statoil, Shell, Conoco, Total, Eni among winners
* Tax change, high costs cast shadow over licensing round
By Gwladys Fouche
OSLO, June 12 Norway awarded 24 oil and gas
exploration licences on Wednesday, mostly in the Arctic Barents
Sea, potentially offering some impetus to a northward push in
the search for energy that has been held back by rising costs
It granted licences to 29 companies, including international
majors Royal Dutch Shell, BP, ConocoPhillips
, Total and local heavyweight Statoil,
in hopes of reviving oil production that is on course to fall to
a 25-year low this year.
The Barents Sea, including its eastern edge along the
Russian border, is estimated by the government to hold 7.9
billion barrels of oil equivalent in undiscovered oil and gas,
but harsh conditions and a lack of existing infrastructure make
development difficult and costly.
The government last month announced plans to increase taxes
on oil firms, prompting Statoil to delay plans to develop the
Johan Castberg field, the biggest find to date in Norway's
Statoil argued said the tax change raises costs, especially
for marginal developments.
But Oil Minister Ola Borten Moe said on Wednesday, after
announcing the results of the licensing round, that the
country's tax regime was stable and supportive.
"We still have a predictable investment-friendly tax
framework; this (tax increase) was just an adjustment," he said.
"Johan Castberg is a very large project and I think it will
go through," he added. "It is not abnormal, unprecedented or
dramatic to use more time to work your way through a project so
Analysts were more cautious, saying the tax change could
have a wider impact and that the awards of licences did not
automatically mean development would proceed.
"I actually find it hard to see anything positive when it
comes to the Barents Sea now, in light of what has happened
recently," Anne Gjoeen, and oil sector analyst at Handelsbanken
Capital Markets said.
"The Johan Castberg discovery initially attracted a lot of
positive attention, now it turns out that even such a big oil
find is not profitable to develop."
"I am very unsure of the potential for profitability there
(in the Barents Sea)," she said. "The cost inflation is high
compared to oil price assumptions."
Interest in the Barents was rejuvenated two years ago when
Statoil discovered Castberg, formerly known as Skrugard/Havis.
Until then, close to 100 exploration wells had been drilled over
three decades, with the vast majority proving to be dry.
The area's chances would be boosted if more resources were
discovered near existing ones, as this would reduce development
"Many of the licences here are just around Castberg, so it
seems like that's where the focus is," Carnegie analyst Martin
Vold said. "I believe Castberg will be developed."
Statoil was among the biggest winners in the licensing round
on Wednesday, taking stakes in seven licences and winning the
right to operate three of them.
Italy's Eni will also operate three licences while
OMV, still a relative small player in Norway, will
have stakes in six licences. North Energy, one of the
smallest firms in Norway, also received six stakes.
Newcomers will include Lukoil and Rosneft
, who will become the first Russian companies to hold
stakes in Norway.
Meanwhile BP, one of the biggest active players in Norway,
received stakes in two licenses and no operatorship, while BG
, Denmark's DONG and Dana Petroleum did not win any
Norway has some of the highest taxes in the world for its
oil sector, but the regulatory regime favours exploration.
Unlike many major producers, it does not sell licences but
awards them to the best applicants and refunds 78 percent of
It also allows firms to write off much of their development
costs and recoups tax money once fields go into production.