By Kjetil Malkenes Hovland
OSLO--The Norwegian government confirmed Wednesday it would
review oil and gas projects operated by companies including BP PLC
(BP) and Canadian energy company Talisman Energy Inc. (TLM),
following delays and cost overruns.
"We have recently seen significant problems on some development
projects on the Norwegian shelf, including [the Yme [platform],"
said Minister of Petroleum and Energy Ola Borten Moe. "I have
therefore asked the Petroleum Directorate to review some bigger
development projects."
The Yme platform, situated in the southeastern North Sea, is
being scrapped without producing oil after it was evacuated last
summer due to cracks in the platform structure. Its owner, Dutch
oil service company SBM Offshore NV (SBMO.AE), said Tuesday it
would pay operator Talisman $470 million to remove the troubled
platform.
The review will examine various issues including cost overruns.
In its 2013 budget, the Norwegian government revised its estimate
of the Yme development costs to NOK14.1 billion, up 188.4% from the
initial 2007 estimate.
Cost overruns directly affect Norway's tax revenues, because oil
companies can deduct 78% of their investments off their tax base.
The government didn't say how much it stands to lose from the Yme
project.
The review, said the government, would include projects where
the total investments were higher than 10 billion Norwegian kroner
($1.5 billion), and those for which the plans for development and
operation, or PDOs, were approved between 2006 and 2008.
Some projects fitting that criteria are the BP-operated Skarv
and Valhall fields and the Talisman-operated Yme field, which
represent a big share of the total cost overruns on the Norwegian
continental shelf.
A spokeswoman for the Ministry of Petroleum and Energy said the
upcoming review would likely also include some projects that hadn't
been hit as hard by cost overruns as these three, but didn't
specify which other projects would be reviewed.
The government said that following the review it would consider
changes to the guidelines surrounding oil and gas projects.
Write to Kjetil Malkenes Hovland at
kjetilmalkenes.hovland@dowjones.com
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