Eni's Arctic Oil Field Approved After Delays and Overruns

OSLO—A Norwegian regulator on Tuesday formally approved the production vessel at the world's northernmost oil field, Eni SpA's Goliat field in Norway's Barents Sea, which could potentially start pumping next month, over two years delayed and well over budget.

"Eni Norway has been given consent by the Petroleum Safety Authority to start using the Goliat floating production, storage and offloading vessel and related installations at the Goliat field,"​said Norway's Petroleum Safety Authority, or PSA.

Production could start in February at the earliest, as the PSA's approval will be on public hearing for up to five weeks.

The Arctic oil field has been delayed several times and was supposed to start producing before Christmas, but the PSA—which oversees oil and gas projects to ensure they are in line with the country's strict safety regulations—requested additional documentation on safety and critical equipment.

The PSA said the approval was based on documentation provided by the project partners, including recent letters from Eni and Statoil, and that some additional work was still required before production could start.

"Eni describes in its letter several activities that remain before the installation can be utilized, and after the production has started. Statoil supports the description, and plans a verification, to assess whether Goliat is ready to start production," the PSA said.

In September, Eni said the startup was just weeks away, and in November it said oil would be flowing by the end of the year. The original plan called for the startup by the end of 2013. Eni has a 65% stake in Goliat, while Norwegian national oil company Statoil ASA owns the remaining stake.

The partners have invested around $6 billion in Goliat, a 52% cost overrun compared with the 2009 plan. With Brent crude trading below $30 a barrel—levels not breached in more than a decade—the Italian oil and gas company is already struggling to make the field economically viable. Analysts have put the break-even point for the field—the point at which it is profitable—at more than $100 a barrel.

Eni wasn't immediately available to comment.

Write to Kjetil Malkenes Hovland at [e-mail]

(END) Dow Jones Newswires

January 19, 2016 17:05 ET (22:05 GMT)

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