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Equinor-led Johan Sverdrup project to start production ahead of schedule

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Equinor-led Johan Sverdrup project to start production ahead of schedule

Equinor ASA and its partners are preparing to begin production from the Johan Sverdrup project earlier than expected, scheduling it for October.

The project, which is the biggest field development on the Norwegian Continental Shelf since the 1980s, was initially scheduled to start production in November, according to a Sept. 5 news release from the Norwegian firm. It is now in the final stages of preparation for operations.

The project is in the process of completing the testing of the equipment and systems needed for the full field center to function and perform as one installation. In a separate release, Equinor's partner Lundin Petroleum AB said most of the hook-up and commissioning work has already been completed.

Johan Sverdrup will produce 440,000 barrels of oil per day during plateau by the summer of 2020, but production is expected to increase to 660,000 bbl/d at the start of phase 2 in the fourth quarter of 2022. The field would produce up to 25% of Norway's total oil and gas output during phase 2 plateau, Lundin said.

Equinor earlier said the estimated investment costs to develop the first phase amounts to 83 billion Norwegian kroner, while the second phase is estimated to cost 41 billion kroner.

Equinor expects operating costs below $2/bbl after the project's first phase reaches plateau production, with cash flow from operations of around $50/bbl in 2020, based on a real oil price of $70/bbl and partly due to the phasing of tax payments in the ramp-up phase.

Lundin also said its production guidance is above 150,000 barrels of oil equivalent per day when phase 1 reaches plateau in 2020, increasing to approximately 170,000 boe/d at phase 2 plateau in 2023.

Equinor holds a 42.6% stake in the project, while Lundin Petroleum subsidiary Lundin Norway AS owns a 20% interest. Petoro AS has a 17.36% stake and Aker BP ASA holds an 11.57% interest. Total SA also owns an 8.44% stake.

As of Sept. 4, US$1 was equivalent to 9.04 Norwegian kroner.