Equinor's Castberg oilfield delayed until end of 2023 - regulator

3 minute read

Equinor's headquarters pictured in Stavanger, Norway December 5, 2019. REUTERS/Ints Kalnins/File Photo

Register now for FREE unlimited access to Reuters.com

OSLO, June 1 (Reuters) - Equinor's (EQNR.OL) Johan Castberg oilfield in the Arctic Barents Sea won't come on stream until the end of 2023, a year later than planned due to technical problems that have also hit its value, Norway's oil and gas safety watchdog said on Tuesday.

The Petroleum Safety Authority (PSA) said in a statement it had identified "serious breaches" of regulations in the construction of the hull for the oilfield's floating production, storage and offloading (FPSO) vessel.

"The project (is) now expected to come on stream in the fourth quarter of 2023, with a consequential reduction in present value as a result of delayed earnings," the PSA said.

Register now for FREE unlimited access to Reuters.com

The Norwegian regulator launched its investigation last year after becoming aware of problems related to the hull's welding at the Sembcorp Marine (SCM) yard in Singapore.

"All parties are committed to ensure the absolute seaworthiness of the vessel," SCM said in an email to Reuters.

"There is ongoing work to ensure the vessel meets applicable safety and integrity requirements," it added.

Equinor's own investigation has shown "quality deviations" regarding both welding and welding inspection, and the company has promised to cross-check and repair welds.

The PSA said that it was not technically feasible to identify reliably all potential defects, and the FPSO vessel might require more maintenance and repairs in the future.

Equinor's desire to maintain a lean project organisation despite the complexity of the project had led to inadequate supervision, the regulator said.

Equinor denied the problems were caused by cost savings.

"This was not related to cost but the composition of the team," a company spokeswoman said in an email.

"We did not foresee the extensive issue with welding and in hindsight we see that we did not have sufficient personnel with welding competence at site until 2019," she said.

Equinor has previously said the project's costs would rise by 6% from the original estimate to 53.4 billion crowns ($6.5 billion), due to delays and the impact of currency changes.

Equinor has a 50% stake in the project, its partner Vaar Energi, a subsidiary of Eni (ENI.MI), holds 30% and Norway's state-owned Petoro owns 20%.

($1 = 8.2627 Norwegian crowns)

Register now for FREE unlimited access to Reuters.com
Reporting by Nerijus Adomaitis

Our Standards: The Thomson Reuters Trust Principles.