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Norway leading oil production gains in Western Europe, industry report finds

Rystad Energy reports total oil production in the region should start to decline next year, with most new gains starting to come from Norway after 2021.

By Daniel J. Graeber
Norway's Johan Sverdrup oil field is expected to be one of the region's main drivers of growth starting in 2020. Photo by BoH/Wikimedia Commons
Norway's Johan Sverdrup oil field is expected to be one of the region's main drivers of growth starting in 2020. Photo by BoH/Wikimedia Commons

July 24 (UPI) -- Most of the oil production gains from Western Europe from 2020 will come from the Johan Sverdrup oil field offshore Norway, an industry report found.

Sector consultant group Rystad Energy, which has headquarters in Oslo, said total production from Western Europe should start to decline starting next year and flatten out at around 6 million barrels of oil equivalent per day by 2021. After that, new gains come mostly from offshore Norway.

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"The contribution of Johan Sverdrup, the largest discovery of the last decade, is visible from 2020, when the field is expected to start producing," the report read. "From 2020 and going forward, Johan Sverdrup is estimated to be the field with the second most significant contribution to production, after the giant Norwegian field, Troll."

Johan Sverdrup is one of Norway's five largest offshore oil fields, and contains an estimated 3 billion barrels of oil. Phase 1 of the field's development is currently underway, with the first deliveries expected to begin in 2020. The estimated capital cost for Phase 2 is between $4.75 billion and $5.9 billion. Phase 1 is expected to cost industrial partners $11.5 billion.

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For spending on exploration and production, Rystad Energy said it expects a steady decline for the region over the next two years, when expenditures bottom out at $26 billion.

"More than 50 percent of the current spending is contributed by Norwegian fields, with nearly half of it being spent on projects under development, Johan Sverdrup in particular," its report read.

Some recovery is expected beyond 2019, but it will be at least 2025 before the level matches spending from 2014, when crude oil prices were above $100 per barrel.

The price for Brent crude oil, the global benchmark, was around $48 per barrel early Monday. Oil from the Troll field in Norway will be added to the basket of crude oils that make up Brent starting next year.

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