Norway to Drill Untapped Arctic Seas

OSLO—Norway's government awarded its first new oil and gas acreage in more than two decades on Wednesday, allowing drilling in an area previously disputed with Russia and continuing a push into the Arctic despite cost challenges and weak profitability in the sector.

"Today, we are opening a new chapter in the history of the Norwegian petroleum industry," said Tord Lien, Norway's minister of petroleum and energy. "For the first time in 20 years, we offer new acreage for exploration."

Announcing the country's 23rd licensing round in five decades, the government offered 10 drilling licenses to 13 different companies, including ConocoPhillips, Chevron, Statoil, and DEA. Attractive acreage is key to ensure long-term drilling activity, it said.

"This is a cornerstone of the government's petroleum policy and is particularly important in the current challenging times for the industry," the government said.

Three out of the 10 new licenses were awarded in a previously disputed area with Russia in the southeast Barents Sea, in the wake of a 2010 delineation deal between the two countries, following four decades of disagreement.

One of the licenses in the southeast Barents Sea borders Russia, and will be operated by Det Norske Oljeselskap ASA with a 40% stake. Russia's Lukoil was offered a 20% stake in the license, and Statoil ASA (STO) and Petoro were offered similar stakes, the government said.

Statoil, Norway's dominant oil company and 67%-owned by the government, was awarded the operating rights on four of the new licenses. Lundin Petroleum AB was awarded three, while Capricorn Norge, Centrica PLC and Det Norske Oljeselskap were offered one each.

"Gradually opening up new areas is crucial for us to maintain profitable and high-level production up to and beyond 2030," said Arne Sigve Nylund, Statoil's head of development and production in Norway.

Sweden's Lundin Petroleum AB said it had been awarded stakes in five Barents Sea licenses, and estimated that some of the prospects in the area could have a resource potential of more than a billion barrels of oil equivalent.

"I am particularly excited about the billion-barrel prospectivity on the acreage awarded in the southeastern Barents Sea," said Kristin Faerovik, managing director of Lundin Norway.

Norway is keen to maintain stable offshore activity as oil companies are reducing investments amid weak oil prices. The country has lost 25,000 oil-related jobs between 2013 and 2015, or 11% of its oil-related workforce, according to Statistics Norway.

Write to Kjetil Malkenes Hovland at [e-mail]

(END) Dow Jones Newswires

May 18, 2016 10:15 ET (14:15 GMT)

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