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Norway’s Johan Sverdrup oil output to reach 535,000 b/d by mid-year: Lundin

Norway’s new Johan Sverdrup flagship oil field should reach output rates of 535,000 b/d from the middle of this year, ahead of second-phase production coming on stream in the fourth quarter 2022, field partner Lundin Energy said Jan. 28.

In a statement, Swedish-owned Lundin said reservoir performance at the field “continues to be excellent,” with 12 wells currently producing. “Phase 1 processing capacity is expected to increase further, up to 535,000 b/d, following modification work to upgrade the water injection facilities, which is expected to be complete by mid-2021,” it added.

Discovered by Lundin in 2010 and operated by state-controlled Equinor, Johan Sverdrup came on stream in November 2019 and has revived Norwegian oil production levels, which rose by 15% to 2.0 million b/d last year. Sverdrup crude, which is of medium gravity unlike typical North Sea grades, has become a staple of China’s independent refining sector.

Equinor had already flagged a likely increase in phase 1 production this summer, after raising output recently to 500,000 b/d.

Lundin reiterated expectations that phase 2 of the project will raise output to 720,000 b/d.

Loadings of Sverdrup crude are set to average 521,429 b/d in February, up 11,751 b/d from January, according to a copy of the loading program seen by S&P Global Platts at the end of December.

Lundin, which owns a 20% stake in the Sverdrup license, increased its overall production by 37% on the year in the fourth quarter of 2020, to 185,000 b/d of oil equivalent, saying it expected its output this year to average 170,000-190,000 boe/d, and that it should exceed 200,000 boe/d by 2023.

It also increased output at its Edvard Grieg field, which feeds into the Grane crude blend, by 13%, to 98,000 boe/d on a gross basis, and reiterated it expects to maintain “plateau” production at Edvard Grieg to late-2023, following updates to the reservoir model as well as ongoing work to add in two satellite projects: Solveig and Rolvsnes.

Solveig and an initial “extended well test” phase at Rolvsnes are both due on stream in Q3 2021, adding about 33,000 boe/d to Edvard Grieg production, Lundin said.

Lundin underlined its “strong financial performance” despite the 2020 oil price crash, with $448 million of free cash flow generated last year, operating costs of just $2.69/boe and a reduction in net debt to $3.9 billion.

It said it had nine potential development projects under consideration “within the new tax environment,” a reference to temporary tax breaks announced last June to stimulate the industry, which expire at the end of 2022.

“This was a challenging year for all, with the impact from COVID-19 on people’s health, society and of course the global oil market. At Lundin Energy we continue to handle the impact with agility and flexibility, safeguarding our people’s well-being whilst keeping our main business priorities on course,” new CEO Nick Walker said. Walker took over from Alex Schneiter at the start of the year, after the latter stood down following a five-year term.
Source: Platts

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