Norway Awards 61 Offshore Licenses in Latest Auction, Including Arctic Blocks
More than 30 oil and gas companies took part in the licensing round, which focused on mature areas that can be developed using existing infrastructure.
The Norwegian Ministry of Petroleum and Energy (MPE) announced today that it has awarded 30 oil companies 61 offshore production licenses in an auction that included frontier arctic areas in the Barents Sea.
Norwegian oil producers Equinor, Aker BP, DNO, and Vår Energi accounted for more than three-quarters of the awards. Norway’s largest producer, Equinor, took home 10 licenses as the operator and seven more as a partner. Eight of these licenses are for blocks in the North Sea and nine are in the Norwegian Sea.
But it was Sweden’s Lundin Petroleum that received the highest number of licenses at 19, seven of which are as the operator. This led the international group of bidders that included small European independents and several multinationals.
Wintershall DEA was granted 16 licenses, four as the operator. The German oil and gas company was awarded nine licenses in last year’s auction and holds a portfolio of more than 100 licenses offshore Norway.
Of the total, 34 licenses were awarded in the North Sea and 24 in the Norwegian Sea, and three in the Barents Sea. A dozen of the licenses are extensions to existing developments.
All three operatorship licenses in the Barents Sea were granted to Vår Energi, a Norwegian subsidiary of Italian oil company Eni, which has existing production facilities in the remote and arctic region. Its partners in the blocks include Wintershall, Lundin, and Petoro.
Vår Energi has committed to drilling at least one wildcat well amongst the three awarded blocks and will need to complete seismic and geological studies on the other two prospects. The Stavanger-based company reports an average production of more than 300,000 BOED with a near-term target to reach 350,000 BOED.
Norway’s MPE launched the licensing round last summer as part of the Awards in Predefined Areas (APA) offshore auction program. Established in 2003, the APA blocks are offered to operators annually to promote the exploration of mature areas.
Kalmar Ildstad, the director of license management in the Norwegian Petroleum Directorate, said in a statement that the interest demonstrated in the APA 2020 auction “shows that the petroleum industry still has significant expectations of making profitable discoveries on the Norwegian shelf.”
Equinor noted in its announcement that discoveries made in the APA blocks are often developed profitably by leveraging regional knowledge and existing infrastructure. The operator added that it will seek to produce its new blocks with a minimal carbon footprint and through digital technologies that it has used to drill its most recent exploration wells.
“We are living in very exciting times. Digitalization gives us new insight into the underground and an opportunity to find more oil and gas,” said Nick Ashton, Equinor's senior vice president for exploration in Norway.
He continued, “At the same time, we are facing ever stricter requirements for CO2 emissions throughout the value chain, from discovery to consumption, and we must succeed in both areas. This is not an easy task, but it is highly rewarding to help solve it.”
Later this year, the MPE will hold its 25th licensing round for blocks on the Norwegian shelf, 11 in the Norwegian Sea and 125 in the Barents Sea.
The Norwegian government said last year that it was opening up more of the arctic areas in the Barents Sea to promote job security in its oil and gas sector and generate wealth from the northern part of the country. Norway is western Europe’s biggest oil producer with a sovereign wealth fund worth over $1 trillion.
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