Industry "disappointed" with Norway's oil and gas licensing round

May 04, 2009 02:00 AM

Norway's oil and gas industry said the latest oil and gas licensing round was "disappointing" after the government accepted bids for only about a fifth of the offshore acreage sought by companies.
In its 20th licensing round, Norway awarded 21 licenses in the Norwegian and Barents Sea to a record 34 oil and gas companies. The acreage covered 63 offshore blocks, a fraction of the 301 blocks companies had requested to explore.

Norway's oil output is on the decline and may slip below 2 mm bpd this year as its North Sea oilfields mature. Sales of Norwegian natural gas are on the rise, however.
"This is disappointing, access to new acreage should have been better especially after the government effectively delayed the 20th round," Sigbjoern Aanes, a spokesman for the Norwegian Oil Industry Association, told. "Some of these areas are exciting and may have new finds but we feel it will probably not be enough to stop the (production) decline on the Norwegian shelf. We had hoped for more."

Thecentre-left government, which faces a general election in four months, said it included environmental concerns and fishing interests when deciding on the 20th licensing round, which it delayed by a year compared to timing of past rounds.
"It is important to impose strict conditions relating to environmental and fisheries concerns to the companies receiving awards in the 20th licensing round," Petroleum and Energy Minister Terje Riis-Johansen said. He said newly introduced block-specific time restrictions on exploration wells and seismic surveys balance environmental, fisheries and petroleum concerns "in a good way."

The record number of companies awarded licences continued Norway's efforts to diversify its offshore sector, which has seen the entry of a number of European utilities and gas firms. At the same time, oil majors have been selling off stakes in smaller North Sea fields and to focus efforts in more prospective regions. Norway's last "elephant sized" find was the Ormen Lange gas field in 1997.
Norway's biggest oil and gas producer StatoilHydro said it was "satisfied" after winning interests in seven new production licences, including five operatorships, while keeping pressure on the authorities to allow more exploration.

Some opposition politicians said StatoilHydro was "favoured" in the round, where British Gas and Italy's ENI were the only other companies receiving multiple operatorships. Both were awarded two compared to StatoilHydro's five.
The Norwegian oil industry is gearing up for a bigger battle due in 2010, after the election, on whether to open the prospective Lofoten Island region for activity.

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