Oil discovery just keeps growing

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The size of the oil discovery made at the Avaldsnes field in the North Sea earlier this year has grown once again and now is believed to rank as the third-largest ever struck in Norwegian waters. The news sparked some welcome life into the Oslo Stock Exchange on Friday.

The drilling rig "Transocean Leader" has played a major role in the oil discovery at Aldous Major South in the North Sea. PHOTO: Statoil/Harald Pettersen

“This discovery will probably be one of the largest on the Norwegian continental shelf and surely the largest made since the mid-1980s,” said Ashley Hellenstall of Lundin Petroleum in a press release from the company on Friday.

Lundin’s updated estimates for the Avaldsnes discovery now lie between 800 million and 1.8 billion barrels of oil, much more than the 100 million to 400 million barrels reported earlier.

When combined with the preliminary estimates for Statoil’s Aldous Major discovery, which is connected to the Avaldsnes field, the two companies are looking at extractable resources estimated at 1.2 billion to 2.6 billion barrels of oil or oil equivalents.

Given today’s oil price and dollar conversion rate, the value of Aldous Major and Avaldsness would amount to around half of Norway’s sovereign wealth fund that has been built up by years of oil revenues from the North Sea. Despite the heavy costs of extraction and operation, the discovery will yield a huge new source of revenue for the Norwegian state and further strengthen Norway’s economy.

Statoil, meanwhile, “sees a considerable resource potential in Aldous Major South and the Avaldsnes area,” said Gro Haatvedt, Statoil’s head of exploration on the Norwegian shelf. “And our understanding of the area is getting steadily better.”

Both Lundin, a Swedish family-run enterprise, and Statoil say they’ll work for rapid development and extraction from the sites. The higher estimates have also been good news for Det norske oljeselskap, which has a 20 percent stake in Aldous Major South.

Newspaper Dagens Næringsliv (DN) reported that shares in Statoil and Det norske rose markedly on the Oslo Stock Exchange after the higher estimates were disclosed on Friday. Statoil was up 3.4 percent and Det norske by a whopping 14.4 percent by mid-afternoon. Lundin Petroleum jumped 29 percent on the Stockholm exchange.

It was welcome activity in an otherwise tough market, hit by lower oil prices and declines on most major stock exchanges in Europe. The upturn for the oil companies offset some of the decline in Oslo.

Views and News from Norway/Nina Berglund
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