Ministry decides on Johan Sverdrup ownership shares (Norway)

To avoid delays of one of the largest oil and gas developments in Norway in recent times – the Johan Sverdrup field in the North Sea – the country’s ministry of petroleum has decided to allocate ownership shares to the partners involved.

As the companies themselves couldn’t reach the agreement, the ministry of petroleum has proposed the distribution of ownership in the following manner:  Statoil (operator) 40.0267%, Lundin Norway 22.6%, Petoro 17.36%, Det norske oljeselskap 11.5733% and Maersk Oil 8.44%.

To remind, while submitting the development plan for the Johan Sverdrup in February this year, the majority of partners, excluding Det norske, asked the ministry to determine the final allocation of resources in Johan Sverdrup, based on the following proposal: Statoil 40.0267%, Lundin Norway 22.12%, Petoro 17.84%, Det norske oljeselskap 11.8933% and Maersk Oil 8.12%.

The companies have until August 15 to sign the revised ownership split. When all five companies have signed the agreement, the Ministry will approve the plan for development and operation for the Johan Sverdrup field. The ministry’s decision may be challenged by an appeal to King in Council and/or in the Civil Court system.

Ownership dispute

The partnership, consisting of Statoil, Lundin Norway, Petoro, Det norske oljeselskap and Maersk Oil, has recommended Statoil as the Operator for all phases of the field development and operation.

However, Det norske disagreed with the proposed ownership split. The Johan Sverdrup field consists of two areas to be unitized into one field development. More precisely, the field covers three production licences: PL 501/501B; PL 265 and PL 502:

Partners:

Production licence 501/501B: Lundin Norway (operator, 40%), Statoil (40%), Maersk Oil (20%)

Production licence 265: Statoil (operator, 40%), Petoro (30%), Det norske oljeselskap (20%), Lundin Norway (10%)

Production licence 502: Statoil (operator, 44,44%), Petoro (33,33%), Det norske oljeselskap (22,22%)

Det norske alleges that the western part, in which it owns a share is more valuable than the eastern part, with more resources, and easier to recover oil, making the investment less expensive, that should eventually lead to Det norske owning a larger share in the unitized field.

In a presentation supporting its case Det norske said that allocating the interest based solely on volume, would be like trading a house located in a rural area for a house located in the very best parts of western Oslo, swapping one square meter for one square meter regardless of the amount of money spent on improving the house or its future value.

Commenting on today’s allocation of ownership by the energy ministry, and a reduction of the proposed ownership interest to Det norske, the company’s CEO Karl Johnny Hersvik said: “We will now study the decision thoroughly before we decide how to proceed”.

Below is Det Norske’s stance on the distribution (in Norwegian with English subtitles) :

Johan Sverdrup is one of the five largest fields ever developed on the Norwegian Continental Shelf and is estimated to produce between 550,000 and 650,000 boepd and will ultimately recover reserves between 1.7 and 3.0 billion boe. At plateau, the field will contribute over 40 percent of total Norwegian oil production.

Offshore Energy Today Staff