OMV to sell stake in Arctic offshore oil field
Austrian oil and gas company OMV has agreed to sell its 25% stake in the offshore Wisting oil field in the Barents Sea off Norway to Swedish oil company Lundin Energy for $ 320 million.
OMV, which discovered the oil field in 2013, said it was increasingly focusing on low-carbon projects, “moving away from the substantial capital expenditure required to develop this project over the next few years. years “.
The acquisition brings Lundin Energy’s direct stake in the project to 35% in the development of 500 million barrels of oil (MMbo). Lundin could have to pay up to $ 20 million more, depending on the CAPEX of the final project.
“Contingent payout will be triggered if a reduced CAPEX number from the current view manifests in the development and operations plan,” OMV said.
In addition to the 35 percent stake in Wisting, Lundin Energy also owns surrounding acreage which is estimated to hold an additional 500 MBB of unsafe gross resources. Wisting is located approximately 310 kilometers off the northern coast of Norway and is expected to be developed via a cylindrical FPSO.
“Wisting will be one of the biggest development projects in Norway over the next few years, becoming the next production center in the Barents Sea. tax incentives established by the Norwegian government in June 2020, Lundin Energy said.
“With the first oil slated for 2028, the acquisition of an additional 25% working interest makes a significant contribution to sustaining the company’s production over the long term. aligned with the company’s decarbonization strategy and commitment to become carbon neutral by 2023, ”added Lundin Energy.
The other partners of Wisting are Equinor with a direct stake of 35%, Petoro with a direct stake of 20% and Idemitsu with a direct stake of 10%.
Equinor is the operator during the development phase and it is planned to transfer the operation to OMV for the operation phase.
“Prior to the finalization of the transaction, the company will work with the Ministry of Petroleum and Energy and licensing partners, to clarify arrangements for the operation phase,” said Lundin Energy.
Nick Walker, President and CEO of Lundin Energy: “The acquisition of a new stake in the high-quality development of Wisting is a perfect example of how we seek to complement our organic growth strategy with opportunistic acquisitions, corresponding to our ambition to perpetuate the business in the long term. With a strong project economy, Wisting will be powered ashore and will contribute significantly to maintaining our long-term production profile.I am delighted to have increased our position in Wisting, at a price that I believe is very profitable for the company. “
Johann Pleininger, The OMV Exploration & Production board member and vice-chairman of the board said: “The divestment of the Wisting oil field underlines OMV’s exploration and production strategy: we have the intention to increase the share of natural gas over oil in order to reduce the carbon intensity of the product portfolio. in the future
Norwegian oilfield equipment and technology supplier Aker Solutions received a letter of intent (LOI) for a front-end engineering and design contract (FEED) from Equinor for the FPSO Wisting last week.
The planned FEED contract includes an option for Engineering, Procurement, Construction and Integration (EPCI) of the upper part of the FPSO.
The scope of FEED is to provide frontline design and engineering for a circular FPSO, to advance project development towards a planned Final Investment Decision (FID). If field development moves to the execution phase, Aker Solutions estimates that the EPCI option will potentially represent a “significant” contract, worth between NOK 8 and 12 billion ($ 963 million – 1.4 billion), subject to final investment decision and regulation. approvals.
“Wisting is one of the biggest industrial projects to come to Norway. We look forward to continuing our long-standing relationship with Equinor for this important field development, and moving the project forward into a planned investment decision, ”said Sturla Magnus, Executive Vice President and Head of the Topside Business and facility of Aker Solutions.
The FEED award follows the completion of the study phase, and work begins immediately with expected completion in the third quarter of 2022. FEED work will be led from Aker Solutions’ offices in Fornebu, Norway.
The FPSO Wisting is based on a Sevan design. The topside will weigh approximately 20,000 metric tonnes, consisting of a large processing module and a large utility module.
Provided the Wisting partners approve the development of the field and build the Sevan-designed FPSO, this will be the second such FPSO in the Norwegian Barents Sea, the first being the Vår Energi Goliat.
Production of the FPSO Goliat in the Barents Sea started in 2016.