Cablegate: Statoil On Opening New Offshore Acreage, Stokman

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DE RUEHNY #0106 0561332
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R 251331Z FEB 10
FM AMEMBASSY OSLO
TO RUEHC/SECSTATE WASHDC 0066
INFO EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/USDOC WASHINGTON DC

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SUBJECT: Statoil on Opening New Offshore Acreage, Stokman

(U) Acting PolEcon Counselor met with a senior official responsible
for offshore exploration and production in northern areas of the
Norwegian Continental Shelf (NCS) at majority state-owned oil
company Statoil on February 9 to discuss the company's vision for
gaining access to additional offshore oil and gas production
acreage, Statoil's oil spill response system, and recent
developments related to the Stokman offshore gas field.

(U) The Statoil representative related that the company has
extensive knowledge and experience in northern offshore areas,
including the politically and environmentally sensitive
Lofoten-Vesteralen region, where Statoil and Norsk Hydro (later
merged with Statoil) had conducted some drilling in the late 1990's
and early 2000's. This took place before a moratorium imposed by
an earlier government headed by current Prime Minister Stoltenberg.
She pointed out that Statoil currently produces oil just south of
this area.

(SBU) Statoil identified two obstacles to development in this area.
First, the NCS is very narrow, so seismic surveys would conflict
with fishing activity and the oil industry would therefore have to
limit their use. Overall, the representative assessed that the
fishing industry is more amenable to negotiation with oil companies
on shared on offshore development than are environmentalists.
Second, the narrow NCS means that production would take place
closer to the coast, leaving less reaction time in the event of an
oil spill or other accident. Our contact was confident that a
robust oil spill emergency system can address this issue. She
pointed out that the Goliat oil field in the Barents Sea, just 40
kilometers from shore, will have the world's most extensive oil
spill emergency system and that similar expertise can be applied in
the Lofoten-Vesteralen region. Proximity to shore will also
require any production infrastructure to be located on the sea
floor.

(SBU) The Statoil official opined that the GON will try to drag out
a decision on developing Lofoten-Vesteralen until after the next
parliamentary elections in 2013. A white paper on the issue is due
to be completed in 2010, though this might slip to 2011. After the
white paper is finished, an environmental impact assessment will be
required. This will make it very difficult to actually begin
production within the current government's four-year mandate.
Comment: This delay would suit junior coalition partners (the
Center and Socialist Left parties) which are hostile to
development. The dominant Labor party is more receptive to oil and
gas industry arguments. End Comment. However, the Statoil
representative speculated that a compromise was also possible, with
the current government perhaps choosing to open less sensitive
areas in the Barents Sea, while continuing to put off a decision to
open up the Lofoten-Vesteralen region.

(SBU) Stokman: Commenting on the recent decision taken by the
Gazprom-Total-Statoil consortium to postpone investment in the huge
Stokman field in Russia's Barents Sea, our Statoil contact said
that the consortium's projections for production by 2013 had been
too optimistic and so she was not surprised at the postponement.
However, she opined that Stokman would eventually be brought online
since European consumers will eventually need Stokman's gas as West
European production of natural gas declines in the future.
WHITE

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