Norwegian energy company Aker BP’s (AKRBP.OL) board has approved a plan to invest about 185 billion Norwegian crowns ($19 billion) to develop new oil and gas fields between 2023 and 2028, it said on Friday.
The cost estimate for a dozen projects, including the NOAKA development in the North Sea with 600 million barrels of oil equivalent, has increased by more than 20% from the 150 billion crowns projected in August.
“General cost inflation is a key part of this capex increase,” a company spokesman said, declining to elaborate.
Equinor (EQNR.OL) last month postponed plans to develop the Arctic Wisting field, in which Aker BP has a 35% stake, citing the impact on costs from global inflation.
The new estimates showed Wisting project costs rising to 104 billion crowns from 60 billion to 75 billion crowns, Equinor has said.
Both Equinor and Aker BP have previously signalled the risk of cost inflation on new developments.
Aker BP’s investment plans also include the installation of a new platform at its Valhall oilfield and the development of the nearby Fenris gas discovery, previously known as King Lear.
It also plans to develop several satellite fields in the vicinity of its Skarv field.
“Net to Aker BP, the oil and gas resources in the projects are estimated at approximately 730 million barrels of oil equivalent,” the company said.
The average break-even oil price for the developments was estimated at $35 to $40 a barrel, up as much as $6 from the previous estimate because of government plans to tax the industry more heavily.
The government has decided to scale back tax incentives that were adopted during the 2020 oil market crash prompted by the COVID-19 pandemic, with companies having raked in record profits as the market has rebounded.
North Sea benchmark oil traded at $87 a barrel on Friday.
(1 Norwegian crown = $0.1026)
($1 = 9.7498 Norwegian crowns)
Source: Reuters
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