Big oil exit leaves Norway tending to ‘own future’

Bloomberg

Norway is realising it will have to do without the deep pockets of the biggest oil companies as it seeks to extend an era that has made it one of the world’s richest countries.
The most recent blow came when only 11 companies applied for new blocks in the Arctic Barents Sea, touted as the country’s most promising area for exploration. Chevron Corp. and ConocoPhillips were absent after bidding the last time, while Exxon Mobil Corp. and Total SA remained out of the race. Of the five super-majors, only Royal Dutch Shell Plc applied.
“It’s a warning and a cause for reflection,” said Stale Kyllingstad, chief executive officer of IKM Gruppen AS, one of the biggest suppliers to Norway’s oil industry. “The Norwegian shelf isn’t as popular anymore. It’s a concern.”
An historic three-year slump in the industry has seen Exxon and BP Plc relinquish their role as field operators in western Europe’s biggest producer. The landscape is changing in the aging North Sea basin in Norway and the UK as companies search for higher margins in projects such as liquefied natural-gas or US shale. Smaller, more specialized companies, some backed by private equity, are stepping in.
The indifference to Norway’s Arctic packs a special sting. The area is thought to hold half of the country’s undiscovered oil and gas, or almost 9 billion barrels, and success in the Barents will be key to stopping a further decline in the country’s production in the 2020s. Financial muscle will be needed to develop finds in a region with little infrastructure.
“The farther north you go, the bigger companies you need to sit in the front seat,” said Kyllingstad. State-controlled Statoil ASA was operator for two thirds of the country’s production in 2016, according to figures from the Norwegian Petroleum Directorate. It has dominated exploration for years with Sweden’s Lundin Petroleum AB and lately Aker BP ASA, the Norwegian company that swallowed BP’s local unit.
Statoil CEO Eldar Saetre last month told Upstream that the retreat of international companies was “not a desirable development.” Even the Norwegian Oil and Gas Association, a lobby group that counts the majors among its members, has a “a certain concern.” The number of companies, and “not least a variety” of them, are key to success, said spokesman Tommy Hansen.