Norway to review oil fields operated by Talisman and BP
BY KJETIL MALKENES HOVLAND
OSLO -- The Norwegian government confirmed that it would review oil and gas projects operated by companies including BP and Talisman Energy, following delays and cost overruns.
"We have recently seen significant problems on some development projects on the Norwegian shelf, including the Yme platform" said Minister of Petroleum and Energy Ola Borten Moe. "I have therefore asked the Petroleum Directorate to review some bigger development projects."
The Yme platform, situated in the southeastern North Sea, is being scrapped without producing oil after it was evacuated last summer due to cracks in the platform structure. Its owner, SBM Offshore, said it would pay operator Talisman $470 million to remove the troubled platform.
The review will examine various issues including cost overruns. In its 2013 budget, the Norwegian government revised its estimate of the Yme development costs to $2.46 billion, up 188.4% from the initial 2007 estimate.
Cost overruns directly affect Norway's tax revenues, because oil companies can deduct 78% of their investments off their tax base. The government didn't say how much it stands to lose from the Yme project.
The review, said the government, would include projects where the total investments were higher than $1.5 billion, and those for which the plans for development and operation (PDOs), were approved between 2006 and 2008.
Some projects fitting those criteria are the BP operated Skarv and Valhall fields and the Talisman-operated Yme field, which represent a big share of the total cost overruns on the Norwegian continental shelf.
A spokeswoman for the Ministry of Petroleum and Energy said the upcoming review would likely also include some projects that hadn't been hit as hard by cost overruns as these three, but didn't specify which other projects would be reviewed.
The government said that following the review it would consider changes to the guidelines surrounding oil and gas projects.
Dow Jones Newswires