Aker BP, Equinor Join Forces at Norwegian Licences

Norwegian producers Aker BP and Equinor have agreed on coordinated development of the Krafla, Fulla and North of Alvheim (NOA) licences off Norway.

Equinor operates Krafla, while Aker BP controls Fulla and NOA. Announcing the deal on June 11, Equinor said the North Sea acreage held several oil and gas discoveries with more than 500mn barrels of oil equivalent in recoverable resources. Further exploration and appraisal potential has also been identified.

The pair plans to develop the area using two processing platforms, one operated by each partner, and possibly several satellite platforms and tiebacks. Poland's Lotos is a minority interest holder in the licences. 

Tax relief

Aker BP and Equinor both committed to fresh investments earlier this week, following Norway's granting of tax relief to the offshore industry, which has been hit hard by the coronavirus (Covid-19) pandemic and the resulting slump in oil prices.

Parliament agreed on June 8 to shield more of companies' earnings from tax in 2020 and 2021 and grant them increased deductions for new investments whose development plans are filed before the end of 2022 and that are sanctioned by the end of 2023. The measures will amount to krone 100bn ($10.6bn) in relief, the ruling conservative party said in a statement.

Equinor said on June 9 it would push ahead with a kroner 1.5bn plan to connect Gina Krog and Sleipner fields to the onshore grid. This means they will be powered by onshore renewables rather than onsite gas generators, reducing their carbon footprint.

Meanwhile Aker BP said it had awarded a kroner 1bn ($105mn) contract to oil services firm Kvaerner to erect an unmanned platform to redevelop the Hod oilfield. The operator had said in April it would put this and other pre-sanction projects on hold. 

Equinor commented that the tax relief provided by the government would "provide the industry with the predictability it needs to continue work on planned projects that will stimulate new investments and maintain activity in a challenging period."

"The petroleum industry is going through a very challenging time, and we are very pleased to see the rapid and strong response from Norwegian lawmakers," Aker BP CEO Karl Johnny Hersvik said. "The proposed changes are appropriate and necessary and will strengthen our capacity to invest while at the same time contribute to improved profitability of new field developments."