Norway's Sverdrup oil output to remain at plateau to early-2025 after record high: Equinor

Norway's prolific Johan Sverdrup oil field is now expected to go into production decline early in 2025 rather than late-2024, after hitting a record high one-day production rate of 756,000 b/d in the third quarter, state-controlled Equinor said Oct. 24.

Sverdrup -- at present by far Europe’s highest-producing oil field -- also hit a symbolic milestone by producing its billionth barrel in the course of the third quarter, Equinor noted in its Q3 results, taking the field more than a third of the way to the expected recoverable volume of 2.7 billion barrels of oil equivalent.

“We are now in a position where we can say we will be on plateau until early 2025,” Chief Financial Officer Torgrim Reitan said in a call with investors, adding that the decline from plateau production was not a surprise given the company’s investment in high production capacity of 755,000 b/d.

“This is as expected, but we’re able to extend it somewhat,” he said, referring to the expected extension of plateau production into early 2025.

Reitan stressed the company continues to drill at the field, with 40 wells likely to be producing by end-2024. The company also plans to start “retrofitting” wells in 2025, turning individual wells into multi-lateral wells. A decision is also expected this year on a Sverdrup Phase 3 development that may come on stream in late-2027, he reiterated.

“Optimizing recovery rates in the reservoirs -- that is really the core competence of this company, something that we have done for 50 years across the large assets on the shelf. This is about optimizing water management, it is about drilling capabilities, reservoir management and doing 4-D seismic [surveys] to really understand how everything works,” Reitan said.

Johan Sverdrup has transformed Norway’s oil production trajectory, with the field currently accounting for a quarter of all oil production in the North Sea. The crude is medium sour, unlike more typical North Sea grades, and has attracted robust prices, partly on the back of the West European embargo on Urals sour crude from Russia.

Sverdrup was assessed by Platts at a discount to Dated Brent of just 77 cents/barrel on Oct. 23.

Maintenance, hurricane impacts

Equinor's overall Norwegian oil production dropped 4% year on year in Q3 to 608,000 b/d, reflecting "natural decline" and planned maintenance. However, the decline was also offset by the continued ramp-up of the Breidablikk heavy oil field, which came on stream in October 2023 and feeds the Grane heavy oil blend, the company said.

Globally, Equinor's oil production was down 7% on the year at 968,000 b/d, reflecting shutdowns in Brazil and Libya -- the latter country experienced turmoil over control of the central bank and oil industry revenues, now seemingly resolved. Hurricanes in the US Gulf of Mexico also impacted Equinor's international production.

The company noted it was impacted by lower global oil prices in the quarter, like its peers. The Platts Dated Brent benchmark was on average 7.4% lower year on year in Q3 at $80.34/b. Platts is part of S&P Global Commodity Insights.

Equinor's average realized price for its oil, including in the US, was $74.0/b, down 8% on the year. The Platts Dated Brent was last assessed at $74.74/b on Oct. 23.

"With solid operational performance and results, we are well on track to deliver strong cashflow from operations in line with what we said at the capital markets update in February," CEO Anders Opedal said.