Equinor reduces investment estimates for projects in development phase by $3.6 billion

Norwegian oil and gas giant Equinor has reduced the estimated investments for operated projects in the development phase on the Norwegian continental shelf by some NOK 30 billion ($3.6 billion) since the development plans were submitted to Norwegian authorities.

This appears from the status for Norwegian projects under development published in the Government’s national budget proposal for 2019, Equinor said on Monday.

Equinor-operated projects that are included in the reporting to the budget are: Aasta Hansteen, Bauge, Johan Castberg, Johan Sverdrup phase 1, Martin Linge, Njord Future, Oseberg Vestflanken 2, Snorre Expansion, Trestakk and Utgard

Margareth Øvrum, Equinor’s executive vice president for Technology, Projects and Drilling, said: “We have successfully reduced the investment estimates by approximately NOK 30 billion since submitting the PDOs to the authorities. The improvements have been achieved in close collaboration with our partners and suppliers, and are mainly a result of increased drilling efficiency, simplification and high-quality project implementation. These figures also include the market effect we have achieved by counter-cyclical investments.”

Adjusting for the currency effects of a weak NOK, the reduction of investments for the portfolio is substantially bigger.

Martin Linge costs increased

Taking over the operatorship for the Martin Linge project in March 2018 Equinor has conducted a thorough review of the project, establishing a plan for safe start-up. Based on estimates of the remaining work at Martin Linge start-up is scheduled for the first quarter of 2020. The updated investment estimate totals NOK 47.1 billion.

According to the company, the investment estimate for Martin Linge has increased by NOK 3.6 billion since last reporting based on Equinor’s assessment of the remaining scope of work. In addition, the change of operatorship has necessitated an accounting change for the project of NOK 1.35 billion.. This applies to charter rates for storage vessels and historical drilling rig rates.

“When we acquired the stakes in the Martin Linge field and took over the operatorship, we allowed for any remaining work and increased costs. As announced, we have therefore spent time at the Rosenberg yard to get an overview of this. After successful platform installation the focus is now  to ensure high-quality completion of the project, and safe start-up of the field,” said Øvrum.