Johan Castberg partners nix consideration of oil transfer terminal at Veidnes

After studying a possible development of a downscaled ship-to-ship oil transfer terminal at Veidnes in Finnmark county in North Norway, Johan Castberg partners Equinor, Var Energi, and Petoro, concluded that the costs of constructing a terminal will be too high, Equinor reported Dec. 13.

The oil export from Johan Castberg will therefore go directly to the market, as described in the plan for development and operation (OGJ Online, Dec. 5, 2017).

In March 2018, the study of a full-scale oil terminal for the Barents Sea was shelved, and a new study of alternative solutions for ship-to-ship transfer of oil from the Barents Sea by a quay in Finnmark was initiated. Several solutions for ship-to-ship oil transfer in a fjord or by a quay were studied.

The studies have considered both current and future volumes. Based on volumes from Johan Castberg and Goliat the financial loss before tax is estimated at $3.6 billion kroner, compared to oil export directly to the market. In a large-volume scenario, including other proven Barents Sea volumes, the financial loss before tax is estimated at slightly above $2.8 billion kroner.

“It is important to the license partners that the petroleum activity helps create local spinoffs. We have indeed left no stone unturned to find economically viable solutions for a terminal, however we have not found the basis for pursuing the project. We will still continue the work of securing local spinoffs and jobs from the field both in the development and operating phases,” said Anders Opedal, Equinor’s executive vice-president for technology, projects, and drilling.

Johan Castberg license partners are Equinor (50%), Vår Energi (30%) and Petoro (20%).