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OSLO, Feb 18 (Reuters) - Norwegian oil and gas group StatoilHydro STL.OL cancelled on Wednesday a 3.8 billion crowns ($543.1 million) investment in its biggest North Sea field, Troll, because of low oil prices and high costs.
The initial budget for the project, which aims to boost oil recovery and maximise the value of gas production at the huge North Sea field, was almost 10 billion crowns, it said.
“The adjustments are necessary because of changes in framework conditions, such as lower oil prices and high costs,” StatoilHydro said in a statement.
StatoilHydro affirmed its 2009 capital expenditure guidance of $13.5 billion after the Troll amendment. Shares in StatoilHydro were off 0.9 percent at 117.50 crowns, outpacing a 1.7 percent fall in the DJ Stoxx Oil and Gas Index .SXEP.
StatoilHydro has in past months voiced concern that offshore services costs were high while quality had deteriorated.
Fast dropping oil prices, which have plunged more than $100 per barrel since mid-2008, have forced many oil companies to delay or postpone projects, although StatoilHyrdo said this week it was handling the downturn and cutting costs. [ID:nLG579354]
StatoilHydro cancelled a sub-project to replace flowlines in gas wells on the Troll A platform but said it would consider replacing them later.
“We are changing speed but not changing course,” StatoilHydro spokesman Ola Morten Aanestad said.
Two other Troll sub-projects will continue as planned.
One envisages injecting gas into oil reservoirs to boost pressure and recovery rates. “A gas injection system will be in place as planned by the turn of 2010/2011,” StatoilHydro said.
It said gas injection in Troll West will increase the field’s oil reserves by 17 million barrels of oil.
StatoilHydro said a new pipeline for rich gas from the Troll A platform to the onshore Kollsnes gas processing plant, including modifications to Troll A and the receiving facility, “will proceed as planned.”
“This will help to secure the Troll field’s position as a reliable, long-term” gas supply source to Europe, it said.
StatoilHydro said Troll contained 60 percent of total gas reserves on the Norwegian shelf and represented “the very cornerstone of Norway’s offshore gas production.”
Troll is the biggest gas field and also one of the largest oilfields on the Norwegian shelf, with production of more than 400,000 barrels per day in 2002 but dropping to about 138,000 bpd.
“The field has been in continual development since it started up, and we are now making Troll more robust in order to meet the future on the basis of today’s framework conditions,” Hege Marie Norheim, head of reserves and business development on the Norwegian shelf, said in the statement.
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