Shell backs out of Norway’s Arctic-focused licensing round

Oil and gas giant Royal Dutch Shell has reportedly decided to withdraw from Norway’s Arctic-focused licensing round. 

When it comes to reasons behind this decision, Reuters quoted the company’s statement as saying, “The decision is part of an optimization of Shell’s global portfolio following the acquisition of BG and a persistently low oil price. Norway remains one of our core areas.”

Back in December 2015, the Norwegian Petroleum Directorate (NPD), a government agency whose task is to manage the oil and gas resources on the Norwegian Continental Shelf, revealed a list of companies that applied for acreage offshore Norway, as part of the 23rd licensing round in the country. Twenty-six companies applied for acreage situated mostly in the Barents Sea including Shell, BP, Centrica, Det norske, Chevron, ConocoPhillips, Lundin, OMV, Statoil, and Wintershall.

At the time, Norway’s Ministry of Petroleum and Energy said it planned to award new licences in the 23rd licensing round sometime before summer 2016, with first drilling operations in new acreage to start in 2017.

Tord Lien, the Norwegian oil and energy minister, told Reuters that Shell’s decision had no implication for the conduct of the licensing round, and that the awards would still be announced before July.

“We have many other competent companies that are competing hard for our promising, new exploration areas,” Tord Lien told Reuters.

Offshore Energy Today reached out to Shell seeking confirmation of these reports and further details on the matter.

Shell confirmed it decided not to pursue an application in Norway’s 23rd license round.

Andy Brown, Upstream Director of Royal Dutch Shell, said: “We have earlier communicated reductions in our global frontier exploration activities in the foreseeable future, to achieve synergies in the combined portfolio. In addition, the market situation is very challenging. In this light, we have chosen not to pursue further the opportunities in the 23rd licensing round.

“Norway is still a heartland for Shell, and in a long term perspective, we regard the oil and gas potential in the northern areas as important. We will continue to pursue opportunities for growth in Norway, including the Barents Sea, if the right opportunities arise.”

Tor Arnesen, Managing Director of A/S Norske Shell, said: “The decision was taken after a global assessment, and reflects a challenging market situation, which requires difficult portfolio choices. Despite knowing we could have explored safely, both environmentally and technically, the current conditions are such that we globally have to prioritise activities with a shorter return on investment compared to a potential Barents Sea discovery. This is of course tough for our employees, who have matured the application in an exceptional way.”

The article has been updated to include a statement by Shell

Offshore Energy Today Staff