Statoil considers leaving West Greenland to keep lid on spending

1/22/2014

Statoil considers leaving West Greenland to keep lid on spending

BY BRIAN SWINT & MIKAEL HOLTER

STAVANGER (Bloomberg) -- Statoil may walk away from exploration in West Greenland as it tries to contain spending.

The licenses are an “exit candidate” as they are costly and Statoil is being choosier where it explores, Tim Dodson, the head of exploration, said in an interview in Sandefjord, Norway. “It has to do with the costly nature, it has to do with the risk profile,” he said, adding the matter isn’t yet decided.

An exit would be a blow to Greenland’s ambition to pump its first crude oil, aided by Statoil’s experience exploring in the Arctic. Cairn Energy spent about $1 billion in a Greenland campaign in 2011 that failed to produce any discoveries.

Statoil, 67% held by the state, this month said it sought to rein in investments after spending reached a record $19 billion last year. Rising costs and lower profitability are hurting oil producers. Royal Dutch Shell, last week had its first profit warning in a decade with Q4 earnings at Europe’s largest energy company seen falling from a year before.

Dodson today reiterated that Statoil’s exploration spending would be about the same this year as last year. Shell is the operator on two of Statoil’s west Greenland licenses. Cairn Energy operates the Pitu license, owned 30% by Statoil, and said today it is still considering plans to drill it.

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