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Norway's Equinor raises Johan Sverdrup phase 1 oil output target to 470,000 b/d

Highlights

Field's low costs to support Norway through coronavirus: company

'Plateau' output to be reached in early-May

Phase 2 production plateau raised to 690,000 b/d

London — Norway's state-controlled Equinor on Monday raised the expected 'plateau production' target for the first phase of its Johan Sverdrup field to 470,000 b/d, from 440,000 b/d previously, and said it should achieve that level in early-May.

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In a statement, Equinor said the 2.7-billion-barrel field, which started producing in October and is the largest field to come on stream in the North Sea in decades, was performing better than expected, with the 10th production well nearing completion. It said it would increase the capacity of the facilities accordingly. It raised the expected plateau production target for phase 2 of the project, due on stream in the fourth quarter of 2022, to 690,000 b/d from 660,000 b/d.

The company added that as of Monday, the field was producing 430,000 b/d, close to the original plateau target.

"Field production has been very good and stable from day one, and the wells have produced even better than expected," Rune Nedregaard, vice president for Johan Sverdrup operations, said.

Lundin Petroleum CEO Alex Schneiter, whose company discovered the field in 2010, had raised expectations the field was likely to exceed the phase-one target in an interview last week with S&P Global Platts, saying he was "very comfortable" the field would achieve its targets and that it could exceed them, despite the coronavirus outbreak hampering Norway's oil and gas industry.

So far there has been no indication of any North Sea producers voluntarily curtailing production to accommodate oversupply in the global market, although some have indicated in recent weeks they will commence decommissioning of a few "late-life" fields producing at very modest rates.

Equinor's executive vice president for Norwegian development and production, Arne Sigve Nylund, underlined the low cost of the project, saying this was a source of strength for the country in the current coronavirus crisis. The field has an operating cost of under $2/b, and the full development is expected to break even at Brent oil prices of less than $20/b.

"Johan Sverdrup is an important project to the companies, the industry and society at large. The project was sanctioned during the oil price fall in 2015 and resulted in important activity to the supplier industry in a demanding period. With low operating costs, Johan Sverdrup provides revenue and cash flow to the companies and Norwegian society at large in a period affected by the coronavirus and a major drop in the oil price," Nylund said.