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Norway COVID-19 travel restrictions likely to delay Yme oil field startup: Lotos


Lotos sees startup being delayed to Q4 2021

Norway easing entry from some European countries

Norway output curb eases from July to 134,000 b/d

London — The redevelopment of Norway's Yme oil field, thought to hold 65 million barrels of crude, is being held up by COVID-19-related restrictions on hiring overseas workers, Polish oil and gas company Lotos said Aug. 12.

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In a results statement, Lotos, which holds a 20% stake in the project, signaled a further delay, saying the operator, Repsol, hoped to start production in Q3 2021, but Lotos, taking a more "conservative" view, expected startup in Q4 2021.

Yme was originally producing from 1996-2001. An earlier plan to redevelop the field went awry as structural issues were discovered, with a production unit deployed for the project in 2012.

Repsol acknowledged delays to the latest project in July.

Lotos was more specific, saying quarantine restrictions on people entering Norway had hampered progress, although it acknowledged these had been eased. Several European countries are exempt from Norwegian quarantine restrictions, including Poland and a number of North European countries, but they still apply to France, the Czech Republic, parts of Sweden, and a number of southern European countries.

Lotos noted that it expects output from Yme to average 25,000 b/d of oil equivalent over the first five years on a gross basis.

The upgrading of the Maersk Inspirer platform at Norway's Egersund shipyard "may be significantly delayed following the introduction... of new regulatory measures in response to the outbreak of COVID-19. The resulting restrictions are affecting businesses, including by preventing them from continuing to hire employees from outside Norway," Lotos said, adding it had been informed of the issue by platform owner Maersk Drilling and project contractor Aker Solutions.

Both of those companies "will have a reduced capacity to operate as well as to fulfil their mutual obligations...First oil production from the Yme field is highly likely to be postponed until Q4 2021," Lotos said.

"The company is seeing a gradual relaxation of... pandemic restrictions, as well as increased availability of foreign subcontractors as mobility restrictions are being cancelled. The easement of the restrictions is important for the commissioning of the systems on the converted platform, and opens a chance for accelerating completion of a part of work. [However] the project schedule may be affected by another wave of new COVID-19 cases and reinstatement of pandemic-related restrictions, as well as extended time of work at sea related to the installation of the platform and the launch of production systems dependent on weather conditions."

Norway's oil production is generally on an upward trajectory following the start of production last October of the giant Johan Sverdrup field. Liquids production in June was up 33% from a year earlier, at 1.86 million b/d, and may increase further with the easing of a curb on production introduced by the government to help balance markets. The June cut of 250,000 b/d eases to 134,000 b/d for the rest of the year under Norway's production curb policy.