Statoil to keep up exploration spending despite falling oil prices

Norwegian energy group Statoil will keep exploration drilling high in 2015 and plans to approve a new project this year, even as oil prices trade at four-year lows, Ivar Aasheim , its field development chief for Norway said.

Statoil expects to give the final go ahead for a smaller, fast-track development before Christmas and sees three to five fast-track projects in coming years, with a further investment decision in 2015.

With oil prices falling around 30 percent since June, oil companies are under pressure to curb investments and Statoil, one of the top spenders in recent years, has also been reining in capital spending, delaying many developments.

“Everything has a limit, so if the oil price goes down to $60 (per barrel) then it will be very difficult to get an investment decision for these projects,” Aasheim said.

Statoil puts smaller, uncomplicated discoveries into rapid development, cutting the time to put them into production in half by using standardised procedures and equipment, and connecting the discovery into producing assets.

It has already decided to go ahead with 11 such projects and the next one, called Gullfaks Rimfaksdalen, a gas development in the North Sea tied into its much larger Gullfaks field.

Aasheim also dismissed speculation that Statoil plans to dramatically cut back its exploration activity in Norway after several notable failures this year and due to falling crude prices.

Statoil is also working on the Johan Sverdrup field, which could cost up to $32.5 billion and a development plan for the first phase of which will be submitted to the government on Feb. 13, Aasheim said.

Sverdrup, which will start up in late 2019, will be Europe’s most expensive oil and gas development and at its peak would produce more than a third of Norway’s output.