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Shell plans for Knarr field closure as Norway business winds down

London — Shell has started planning the closure of the last oil field it operates offshore Norway, Knarr, as it dials back its presence in the country.

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In an emailed comment, Shell noted a requirement to present a decommissioning plan to Norway's regulator two years before an anticipated shutdown, but added it had yet to make final decision.

Shell started production at Knarr, in the northern part of the North Sea, in 2015. Liquids output reached 72,000 b/d in August 2016, but has since fallen steeply, to average 20,000 b/d last year, and 16,000 b/d in the first quarter of this year. The crude is offloaded directly onto shuttle tankers. Efforts to find new resources in the vicinity have so far failed, although this is not ruled out.

"We have started mapping the impacts of a future decommissioning of [Knarr]. We do not have a firm end of field date, as this is pending production performance, oil price, cost developments, and whether there still are incremental economic resources that can be developed on Knarr," Shell said.

Shell sold its operating stake in the Draugen field and its stake in Gjoa last year to Oslo-listed OKEA, which is backed by Thai oil company Bangchak. It also closed down the Gaupe field in July.

The company still operates the sizable Ormen Lange gas field, and holds minority stakes in other fields.

But unlike BP and Total it has not taken a stake in Norway's giant Johan Sverdrup field, which is due on stream this year, with first-phase output to reach 440,000 b/d. BP's Norwegian joint venture Aker BP holds 11.57% of Johan Sverdrup, while Total obtained an 8.44% stake when it bought Denmark's Maersk Oil last year.

--Nick Coleman, nick.coleman@spglobal.com

--Edited by Jonathan Dart, newsdesk@spglobal.com