By Dominic Chopping
Equinor ASA (EQNR.OS) and its partners on the Johan Sverdrup field in the North Sea said over the weekend that production on the giant field started on Saturday, more than two months ahead of schedule and 40 billion Norwegian kroner ($4.4 billion) under budget.
"Johan Sverdrup coming on stream is a momentous occasion... at peak, this field will account for around one third of all oil production in Norway," said Equinor Chief Executive Eldar Saetre. "Johan Sverdrup is expected to generate income from production of more than NOK1.4 trillion of which more than NOK900 billion to the Norwegian state and society."
Johan Sverdrup has expected recoverable reserves of 2.7 billion barrels of oil equivalent and the full field can produce up to 660,000 barrels of oil a day at peak.
The break-even price for the full-field development is less than $20 a barrel. After reaching plateau for the first phase, initially expected during the summer of 2020, expected operating costs are below $2 a barrel. The operator also expects cash flow from operations of around $50 a barrel in 2020, based on a real oil price of $70 a barrel, partly as a result of the phasing of tax payments in the ramp-up phase.
The plan for development and operation for Johan Sverdrup phase 1 had set a target for production start-up in late December 2019. Since the PDO was approved in August 2015, investment costs for the first phase of the development have been reduced by NOK40 billion to now NOK83 billion.
The Johan Sverdrup partnership consist of Equinor as operator and partners Lundin Petroleum, Petoro AS, Aker BP ASA (AKERBP.OS) and Total.
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