Norwegian oil company Var Energi ASA plans to green-light a swath of new projects to maintain output from an aging basin into the next decade.
Chief Executive Officer Nick Walker said he wants to give the go-ahead to 20 projects “over the next few years,” targeting output of 350,000 to 400,000 barrels of oil equivalent a day through 2030 and beyond.
Norway, which provides about 15 percent of Europe’s crude, sees itself as a strategic supplier as the region pivots from Russia. Producers are spending billions to squeeze more oil from the country’s continental shelf, where output peaked in the early 2000s. They’re increasingly targeting barrels that can quickly be tied into existing infrastructure to slow the rate of decline.
“What we’re going to be able to show is that we can sustain higher production for longer,” Walker said on a conference call. The oil and gas company, Norway’s third-biggest, has earmarked about $15 billion over the next five to six years to do so.
The 20 new projects would come on top of 10 it has sanctioned this year. Future developments are “all tiebacks into existing infrastructure,” which helps drive down operating expenses and capital spending, Walker said.
Keeping costs in check is key, since oil prices have slumped 20 percent this year to around $60 a barrel. There’s little hope of a revival next year, with global supply forecast to exceed demand by a record margin. Yet Var Energi and others are betting that, with the energy transition bumpy and climate commitments faltering in multiple countries, crude oil will be needed for decades to come.
“We are clearly in a lower price environment and a lower price cycle,” and “that’s likely to extend for at least a part of next year,” Walker said. Falling prices will slow capital spending in some parts of the world, particularly in North America, but “$60 is not sustainable long-term, and I think we will see prices coming up.”
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