The race is on to become Norway’s biggest non-state oil company.
As supermajors like Exxon Mobil Corp. and BP Plc move their focus to other regions, a new group of smaller companies is revitalizing the Nordic country’s oil industry. They are buying up reserves and pumping money into new and existing fields, setting a course to surpass larger rivals and become Norway’s largest producers behind state-controlled Equinor ASA and Petoro AS.
Here are the contenders for the No. 3 spot:
Aker BP ASA: The result of a landmark 2016 merger between an independent Norwegian oil company and BP’s local unit. It is investing $1.3 billion this year and plans to double production to 330,000 barrels of oil equivalent a day in 2023. Var Energi AS: The product of the merger between Norway’s private equity-backed Point Resources AS, which bought Exxon-operated oil fields in the country, and Eni SpA’s local unit. It plans to invest $8 billion over five years to reach 250,000 barrels a day of output in 2023 from 170,000 barrels last year. Wintershall DEA: The planned combination of German oil companies Wintershall AG and Deutsche Erdoel AG. The two plan at least 2 billion euros ($2.3 billion) of investments each in Norway between 2017 and 2021. The merged entity’s production could reach 200,000 barrels a day in the “near future.”
If Aker BP maintains current spending levels, these companies could together pump in at least $20 billion in the five years to 2022 — the equivalent of a year’s investment by all oil companies together in Norway.
The race among the companies, which could be fueled by even more acquisitions, will propel at least one of the three past Total SA, Norway’s third-biggest producer last year with 214,000 barrels a day, despite some additional output it will get from the giant Johan Sverdrup project.
The scramble could turn out to be a boon for Norway, western Europe’s biggest oil and gas producer but facing a dearth of big projects by the beginning of the next decade.
“It’s very exciting,” said Bente Nyland, the head of the Norwegian Petroleum Directorate, the industry regulator.
To Aker BP, winning matters. The company, in which BP retains 30 percent, isn’t about to let any of its rivals surpass it.
“Absolutely not,” Chief Executive Officer Karl Johnny Hersvik said in an interview during the ONS Conference in Stavanger last month. “We actually think this is fun. Because there’s nothing that creates more innovation than competition.”
Having acquired the Exxon fields, and encouraged by new owners HitecVision AS, there’s a flurry of activity at Point Resources, with engineers busy with ideas on how to boost output, said Kristin Kragseth, vice-president for production. Yet she doesn’t “spend much time on the competition aspect,” said the former Exxon executive who is also the incoming CEO of Var Energi.
Read more from the interview with Var Energi’s incoming CEO
“We have very concrete plans to grow,” Kragseth said in an interview at ONS in Stavanger. “If that makes us one of the biggest producers, great.”
Throwing its hat in the mix is Lundin Petroleum AB. Its stake in the giant Sverdrup field is set to almost double the company’s output to more than 160,000 barrels a day in four years. Chief Executive Officer Alex Schneiter said in an interview production could even exceed 200,000 barrels by 2022-23.
The Norwegian oil industry is about to see “some real competition,” DEA boss Maria Moraeus Hanssen said from the stage at the conference.