Letters Of Intent Signed By Statoil ASA (ADR)(NYSE:STO) For 2nd Phase Of Johan Sverdrup Development

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Letters of intent have been inked by Statoil ASA (ADR)(NYSE:STO) and Aibel as well as a Kvaerner and Aker Solutions joint venture with regards to the Johan Sverdrup development. Aibel has also been issued with a letter of intent to construct a processing platform topside in the second phase of the project. This will consist of construction, procurement and engineering works of topside with regards to the second processing platform of Johan Sverdrup.

The project is expected to be completed by 2022 and once it is ready the production capacity will be increased from 440,000 to 660,000 barrels of oil a day. The value of the contract is NOK8 billion. As for the letter of intent with the joint venture of Kvaerner and Aker Solutions, this is in relation to field center modifications. This will include construction, procurement and engineering works. The value of this contract is NOK3.4 billion.

Second phase

In the next four years it is expected that the second phase of the development will see power incorporated to Utsira High area from shore. It is also expected that another power converter will be installed on a new processing platform. A plan for the development as well as the operation of the second phase of Johan Sverdrup is expected in this year’s second half. The government of Norway will however have to approve these contracts before development commences.

The second phase contracts in the Johan Sverdrup project are expected to offer employment opportunities to over 3,000 people in Norway. The first phase of the Johan Sverdrup development is currently in progress and its commencement is scheduled to be late next year.

Supporting local economy

So far contracts worth over NOK60 billion have been issues for the Johan Sverdrup development. More than 70% of these contracts have been awarded to Norwegian suppliers. This comes in the wake of Statoil making plans to rebrand to Equinor as a way of showing its commitment to becoming a broader energy firm whose focus is not just on oil.

“Reflecting on the global energy transition and how we are developing as a broad energy company, it has become natural to change our name,” said the chief executive officer of Statoil, Eldar Saetre, in a statement.

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