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Financial Times: Norway begins drilling in Arctic waters to assess oil prospects

By Ed Crooks in London
Published: November 26 2007 02:00 | Last updated: November 26 2007 02:00

StatoilHydro, the Norwegian national oil company, has begun a two-year drilling programme in Arctic waters to determine the potential of Norway’s share of one of the world’s few remaining unexplored oil prospects.

It also hopes to co-operate with Russian companies such as Gazprom to find oil and gas further into the Arctic, including areas disputed between Russia and Norway.

Helge Lund, StatoilHydro’s chief executive, has called for an international framework to protect fragile communities and environments in the Arctic, to enable development to go ahead without unacceptable damage.

StatoilHydro last month became the first company to start deliveries of liquefied natural gas from an offshore field inside the Arctic circle with its Snohvit project.

Over the next 18 months or so, StatoilHydro plans to have a drilling rig working continuously looking for gas in the area around the Snohvit development, to see if it can find enough to justify building a second line for producing LNG.

Meanwhile, Eni of Italy is leading the Goliat project, in which StatoilHydro is a partner, to develop oil reserves off the north coast of Norway.

Mr Lund suggested in an interview with the Financial Times that he wanted Norway to work with Russia on future development of Arctic resources.

“During the next five to 10 years, I think we’ll learn a whole lot, and you can see perhaps an industrial scenario being developed in the Norwegian and the Russian side of the Barents sea that will qualify the industry to work on even more challenging areas,” he said.

StatoilHydro has been chosen by Gazprom as one of the foreign partners in developing the state-controlled Russian company’s massive Shtokman gas field off Russia’s north coast.

Mr Lund also said it was “important that we can define a framework that respects the sensitivity of those [Arctic] areas, particularly in the Norwegian sea”.

Arctic oil and gas exploration has been highly controversial because of the threats that critics say it presents to local people and wildlife.

Royal Dutch Shell has been blocked by legal action in the US from beginning its planned drilling programme in the Beaufort sea, north of Alaska.

Merger gains, Page 20, plus map: www.ft.com/arctic

Copyright The Financial Times Limited 2007

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