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Gulf Times (Qatar): Statoil cutting output targets by 3% over deposit delays

EXTRACT:  Oil companies including Statoil and Royal Dutch Shell Plc are scrambling to find new reserves fast enough to replace a decline in output from oil fields in the North Sea. Surging demand for offshore rigs and services has led to a shortage of equipment, setting back the development of some deposits.

THE ARTICLE

Published: Sunday, 1 October, 2006, 11:15 AM Doha Time
 
OSLO: Statoil ASA, Norway’s largest oil company, cut its oil and gas production targets for this year and next by 3%, the second time in two months the company has lowered goals because of delays in developing new deposits.

Output will be about 1.14mn bpd of oil equivalents in 2006 and 1.3mn bpd in 2007, down about 3% each year from previous forecasts, Stavanger, Norway-based Statoil said on Friday in an e-mailed statement.

“This is bad news for Statoil,’’ said John Olaisen, an analyst at Carnegie in Oslo. “The company has many new fields starting up production, and any delays will be difficult to rectify quickly because of limited capacity’’ of offshore rigs and services. He rates the stock “underperform.’’

Oil companies including Statoil and Royal Dutch Shell Plc are scrambling to find new reserves fast enough to replace a decline in output from oil fields in the North Sea.
Surging demand for offshore rigs and services has led to a shortage of equipment, setting back the development of some deposits.

Statoil last revised production targets on July 31, when the goal for this year was reduced by as much as 2%. Among the fields to blame for the lower-than-expected production are Kristin and Gulltopp in the Norwegian Sea, an area with deep waters and harsh weather conditions.

“Technical and capacity-related challenges within the drilling and well area at some of the established oil fields will lead to deferred production both in 2006 and 2007,’’ Statoil said. The revisions don’t affect Statoil’s reserves, it said.

A complex reservoir structure at the Kristin gas and condensate field means Statoil won’t be able to step up production there as fast as planned. The deposit, which has the highest temperature and pressure of any field developed in Norwegian waters, will reach plateau production in the first quarter of 2007, Statoil said.

The Gulltopp oil and gas development, located in the Tampen area in the Norwegian Sea, can’t start production until the drilling facility on the nearby Gullfaks A platform is strengthened, Statoil said. Production is set to start in the second quarter of 2007, it said.

Outside of Norway, the In Amenas gas and condensate field in Algeria started gas production in June, about half a year later than Statoil expected when the company bought its 50% stake in 2003.

The South Pars development in Iran is behind schedule because of slower-than-expected progress in building parts for three platforms, Statoil has said. – Bloomberg

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