Operator Statoil and its partners have been given the formal approval to develop the first phase of their giant Johan Sverdrup oil field off the coast of Norway, the country’s energy ministry said on Friday.
The largest field found in the North Sea in three decades could hold as much as 2.9 billion barrels of oil and has an estimated cost of up to 220 billion Norwegian crowns ($26.80 billion), of which the first phase is budgeted at 117 billion.
Initial development of the field, which is due to start production in late 2019, has already been ongoing for months as the companies rush to take advantage of a sharp fall in the cost of energy engineering services caused by the drop in oil prices.
“We are on schedule in the Johan Sverdrup development. The project activities will now be stepped up, and more contracts will be awarded in the autumn. Last week the first piece of the development, the pre-drilling template, was installed on the field in the North Sea,” Statoil said in a statement.
The government, under pressure from rising unemployment in oil-related industries as many companies cut back on investments, has also been eager to get the project started.
Statoil said contracts worth more than 40 billion crowns have been awarded so far and that 75 percent of these had gone to firms based in Norway, among them engineering company Kvaerner.
The phase one development has a production capacity in the range of 315,000-380,000 barrels per day, it added.
Det Norske has a stake of 11.6 percent, Lundin Petroleum has 22.6 percent, A.P. Moller-Maersk holds 8.4 percent, while Statoil has just over 40 percent of the field.
Det Norske claims it should have a larger piece of the pie, and is awaiting the outcome of an appeal to the government.
(Reporting by Terje Solsvik; Editing by Himani Sarkar)