Statoil spending buoys offshore Europe hopes

The long awaited upturn in the European offshore oil and gas sector was given a further lift by Norwegian oil giant Statoil AS, which released figures yesterday suggesting more than 1,000 billion kroner will be spent on the Norwegian continental shelf (NCS) over the coming decade. As the 'leading industrial architect' on the NCS, Statoil expects to account for nearly half this amount, some 450 billion kroner, according to Chief Executive Olav Fjell.


Darius Snieckus
OGJ Online

STAVANGER�The long awaited upturn in the European offshore oil and gas sector was given a further lift by Norwegian oil giant Statoil AS, which released figures yesterday suggesting more than 1,000 billion kroner will be spent on the Norwegian continental shelf (NCS) over the coming decade.

As the "leading industrial architect" on the NCS, Statoil expects to account for nearly half this amount, some 450 billion kroner, according to Chief Executive Olav Fjell. The oil company further calculates investment in new field developments on the NCS over the next 10 years to total more than 350 billion kroner, the oil company contributing 60 billion of that sum.

Statoil's bullish numbers were conditionally echoed in a report released today by UK energy industry analysts Douglas Westwood Ltd. and data specialist Infield Systems. The Offshore Europe Report projects that total capital spending in the region will jump by $3.5 billion over the next year.

The report authors forecast capital expenditure increasing from $9.49 billion to $12.96 billion in 2001. But the downside to this rising investment trend is that it will be followed by a "long, slow decline." Expenditure totaling some $53 billion will be infused into further developing fields off Europe over the next 5 years�of which $46 billion will be split between the Norwegian and UK sectors.

Douglas-Westwood's Will Rowley suggested the industry's recovery from a lean last 2 years is on the way. "Our survey of operators show that confidence is returning," he noted. "European offshore contractors are reporting increased inquiries and expect an upturn in 2000, with 2001 likely to be a busy year."

However, joint author Roger Knight, of Infield Systems, cautioned sector optimism should be tempered by a recognition that a "fundamental change" is afoot off Europe, with the area now a "mature region dominated by prospects for a large number of small fields."

Infield Systems' figures show that, during 1995-99, some 26 billion boe in reserves were brought onstream through 186 fields�an average 142 million bbl per development�whereas for 2000-04 there are 315 potential prospects with reserves in the region of 14.4 billion boe, translating to an average 45.8 million bbl.

The report's findings reinforce the accepted view that the majority of new developments off Europe�122�are shaping up to be subsea satellites.

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