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While oil plunges, ENI floats out giant Barents Sea platform

Brent crude tumbles below $50 per barrel on Wednesday, but Eni insists the economics are robust at the €4,86 billion Goliat field. Also the Norwegian Oil and Gas Association has great faith in the future in the Barents Sea.

“No one is untouched by the big changes we see unfolding now, but our members have great faith in the future of the Barents Sea,” says Geir Seljeseth, Communications manager with the Norwegian Oil and Gas Association.

On Tuesday, oil fall bellow the magic $50 a barrel for the first time since 2009. The sharp slide is a result of increased global production, including boosting U.S. shale-oil production, and softer demand as economies slow down and alternative energy takes over.

Many believes future Arctic offshore fields are among the first to be put on hold as developments- and safety costs are higher in northern waters. Seljeseth with the Oil and Gas Association says to BarentsObserver that their members will review each field, but the general view is optimistic.

“There will be reviews from case to case, but the Goliat platform is already on the water in South Korea and we will during the year go from one to two operating fields in the northern seas,” says Geir Seljeseth.

Eni’s troubled delayed giant floater for the Goliat field off the coast of Finnmark was recently put the water as far away from the European Arctic as it is possible to come on the northern hemisphere.

“The Goliat FPSO will depart the Hyundai yard in South Korea in early 2015,” writes Communication Manager with Eni Norway, Andreas Wulff, in a press-release.

Eni’s first plan to start oil production at the field in the Barents Sea in autumn 2013 is nearly two years delayed. If the current schedule holds, production start-up targeted for mid-2015.

Goliat will be the first oil field to come on stream in the Norwegian part of the Barents Sea. Located at 71° 30’  North, the field will also be the world’s northernmost offshore. Russia’s Prirazlomnoye field in the Pechora Sea is today’s northernmost, at 69°15’ N.

After a series of tests, the FPSO will be loaded on a transport vessel sailing around the globe to Hammerfest on Norway’s Barents Sea coast.   

Project cost estimates are now around NOK 45 billion (€4,86 billion), up from originally estimates of NOK 34 billion (€3,66 billion). Parts of the price-jump are due to engineering changes and higher prices on equipment that took longer time to get in place on board.

Eni, however, argues that the project is still economically robust. 

“The Plan for Development and Operation (PDO) for the Goliat field was submitted in 2009, in a period during which the oil price was much lower than it is today, with correspondingly low levels of activity in major parts of the supply chain, both in Norway and globally,” the company writes.

In Hammerfest, local industry gets contracts and other spin-offs by the project.