Equinor flags big cost increase at Johan Castberg

Market: Crude oil
19/09/23

Norway's state-controlled Equinor said today that costs have ballooned at the Johan Castberg oil project in the Barents Sea, but it said it still plans for production to begin there in the fourth quarter of 2024.

The investment cost has increased by 13bn Norwegian kroner ($1.2bn) since last year, Equinor said, putting the estimated final cost at NKr80bn. The development, which contains up to 650mn bl of recoverable oil, was estimated to cost NKr57bn when the plan was submitted in 2017. Equinor said project costs has risen by NKr15bn since then, with currency effects accounting for the rest.

The development has been twice delayed, first by the oil price drop of 2014-15 and then when construction on the field's 190,000 b/d floating production, storage and offloading (FPSO) vessel was stopped for a year because the Singapore shipyard building the hull closed during the Covid-19 pandemic.

The cost increase is mostly caused by "more complex than anticipated" work on the FPSO, which is now under construction in the Norwegian port of Stord. Equinor said there have also been cost increases for marine operations, drilling and completion.

Johan Castberg will consist of 30 wells tied back to the FPSO, and will be only the third producing field in Norway's section of the Barents Sea along with the Snohvit gas field and the Goliat oil field. The 500mn bl Wisting field has been delayed by its operator, Norway's Aker BP.

Equinor is developing Johan Castberg with partners Var Energi and state-owned Petoro.

By Ben Winkley

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