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Norway’s Equinor EQNR.OL and its partners said on Tuesday they had raised the project cost estimate for their joint Johan Castberg oilfield in the Arctic Barents Sea by close to 13 billion Norwegian crowns ($1.20 billion).
“Costs are increasing due to a larger than expected scope of work and cost increases in the industry,” Equinor said in a statement.
The field’s planned start of output was maintained for the fourth quarter of 2024 and output is expected to last for some 30 years, Equinor said.
The updated project cost estimate is now 80 billion Norwegian crowns, an increase of close to 13 billion since last year and up from 57 billion originally projected when the Castberg development was launched in 2017, Equinor said.
The Castberg floating production, storage and offloading vessel (FPSO) is designed to produce close to 190,000 barrels of oil per day from the field, and is considered profitable at oil prices above $35 per barrel, the company added.
Crude oil currently trades at around $95 per barrel.
Equinor has a 50% stake in the development while Eni’s ENI.MI Norwegian unit Vaar EnergiVAR.OL owns 30% and state oil firm Petoro, 20%.
($1 = 10.8150 Norwegian crowns)
(Reporting by Terje Solsvik; Editing by Anna Ringstrom and Muralikumar Anantharaman)
The financial outline provided by Equinor for its Arctic oil project, amounting to $1.2 billion, reflects a pivotal moment in the pursuit of energy resources in remote locations. It is crucial that this venture aligns with global sustainability goals and addresses community concerns regarding environmental stewardship.