Equinor, Lundin gear up for Arctic oil field FID after OMV stake sale

Austria's OMV has completed the $320 million sale of its 25% stake in the Wisting project in the Norwegian Barents Sea to Lundin Energy, the companies said Dec. 17, with state-controlled Equinor set to remain operator of the far northern field when it comes online toward the end of the decade.

OMV, which discovered the 500 million barrel field in 2013, has ben scaling back its North Sea presence as it focuses on ties with Russia and elsewhere. However, it retains minority stakes in producing fields Aasta Hansteen, Edvard Grieg, Gudrun and Gullfaks.

In separate statements, Equinor and Swedish-owned Lundin said they had resolved earlier questions over operatorship of the field, intended to support Norwegian production volumes into the 2030s.

They reiterated plans for a final investment decision by the end of 2022, timed to meet a cut-off point for temporary tax breaks that expire at the end of that year.

An environmental impact assessment will be completed in the first quarter 2022, Equinor added. The crude is of medium gravity, estimated at 36 API.

The purchase means Lundin increases its stake in Wisting, Norway's northern-most oil and gas project, from 10% to 35%, on par with Equinor's 35% stake.

However, Lundin said it was waiving the potential for it to become operator once Wisting is online, which it has said could be in 2028.

Having made the original discovery, some 300 kilometers north of the mainland, OMV agreed to let Equinor take on the role of operator during the field's development, but with the role reverting back to the Austrian company following production startup.

Lundin will instead become responsible for exploration in nearby licenses that could yield additional production for the facility, the two stakeholders said.

Arctic challenge

Norway has just one producing oil field in the Barents Sea, Goliat, while the delayed Johan Castberg project is due on stream in the fourth quarter 2024.

So far, the country has resisted calls from environmentalists to end new exploration, but the system of numbered licensing rounds for more "frontier" areas is being challenged, with no round expected in 2022.

Barents Sea oil and gas exploration has fallen short of hopes raised by the delineation of the maritime boundary with Russia in 2011; Lundin has put a number of discoveries on hold due to insufficient resources and lack of infrastructure.

Wisting also comes with challenges, both geological and related to safety and logistics. However, Lundin voiced confidence, saying the new arrangements create "a strong collaboration for exploration and operations in what will be the next Barents Sea production hub."

It added the project would be "in line with" the company's plans to become carbon-neutral by 2023 as the intention is for the facility to source power via a cable from shore, in turn tied in to Norway's renewables-based electricity grid.

"We are ready to continue our operatorship into the operations phase of the Wisting field... We will ensure safe and efficient operation of the Wisting field, in close cooperation with our license partners," Equinor's senior vice president for northern exploration and production, Kristin Westvik, said.

The other Wisting shareholders are state holding company Petoro and Japan's Idemitsu.