OMV in plans for $6bn initial spend to develop Norway oil discovery

Austria's OMV and partners plan to invest up to $6 billion initially to develop the Arctic Wisting oil find, Norway's northernmost oil discovery, which could start production within a decade, a senior executive said on Wednesday.

OMV, which is partly owned by Abu Dhabi's Mubadala Investment Company, owns a 25 per cent stake in the Wisting licence and the other stakeholders are Norway's Equinor, Norwegian state-owned firm Petoro and Japan's Idemitsu.

OMV said the recoverable resource estimate of the find had increased to 440 million barrels of oil, from 350 million barrels previously, after drilling of an appraisal well at the site in 2017.

Knut Mauseth, head of OMV's Norwegian subsidiary,said on the sidelines of an energy conference on Wednesday that the group plans an initial investment of $4.7 billion to $5.9bn to develop the find.

Trade publication Petro.no was first to report the preliminary cost estimate.

Wisting is Norway's northernmost oilfield, located 300 kilometres north of the Nordic country's mainland.

Mr Mauseth said a floating production, storage and offloading (FPSO) vessel would be used as a production facility and oil from the field would be exported from the field by tankers, Reuters said. A decision on the type of FPSO would be taken in 2020, with production expected to start in 2026, he said.

The Norwegian government is keen for oil firms to develop new oil and gas in the Barents Sea and is considering building an oil terminal on mainland Norway to handle oil exports from offshore fields.

Mr Mauseth, however, said OMV did not believe a terminal would be economically viable.

_______________

Read more:

OMV earnings surge by more than 30%

Adnoc and Mubadala to jointly explore downstream investments

_______________

"If it makes sense, we are prepared to consider that, but so far the numbers haven't been favourable, it's not economic to do it that way," he said.

On other projects, OMV plans this year to drill one appraisal well at its Hades/Iris gas and condensate discovery in the Norwegian Sea, one of the largest finds off Norway in 2017, Mr Mauseth said.

The discovery, near the Equinor-operated Morvin field, so far is estimated to hold 6.2 billion to 34.1 billion cubic metres of gas and 7.5 million to 51.6 million barrels of condensate.

The Norwegian Petroleum Directorate, the state agency managing the Nordic country's oil and gas resources, said the discovery was expected to have a significant upside.

"If it [the appraisal well] provides good news, then we have another development project," Mr Mauseth said.

In December, Abu Dhabi National Oil Company awarded OMV a 5 per cent stake in the Ghasha concession, the third foreign partner for the ultra-sour gas project that contains high levels of sulphur. The firm will contribute 5 per cent to the project capital and operational development expenses. Adnoc didn't reveal the value of the deal.