Frontline's VLCC FRONT CHAMPION. Photo: Frontline

SINGAPORE (Dow Jones)–Norwegian oil major Statoil ASA (STL.OS) has chartered a vessel to ship North Sea Forties crude oil to Asia, in what could be at least the fourth arbitrage voyage for the Brent component to Asia in three months.

Statoil has provisionally chartered DHT Eagle to ship 2 million barrels of Forties crude from Hound Point to Asia, loading Feb. 12, a shipping fixture showed Monday. The cargo will likely head to South Korea, where Statoil has storage infrastructure.

South Korean appetite for North Sea crude has grown since its free-trade agreement with Europe came into effect in July. The agreement allows Korean buyers of North Sea Crude to redeem 3% of the price, making arbitrage deals attractive.

A narrowing of the Brent/Dubai exchange of futures for swaps–or EFS, which is the sweet-sour crude oil price differential–has also made Brent-linked grades more attractive to Asian buyers, increasing the flow of oil from west to east in recent months.

Exports of more North Sea crude oil will likely firm the European market, somewhat offsetting the bearish impact of Petroplus Holdings AG (PPHN.PB) recently shutting down some of its refineries.

The latest fixture, if confirmed, would mean that a total of 8 million barrels of Forties will have left the North Sea for Asia in three months.

Earlier this month, Statoil chartered VLCC Front Champion, at $6.10 million, for Jan. 21-23 loading from Mongstad port in Norway, to ship 2 million barrels of crude oil to South Korea.

-By Gurdeep Singh, Dow Jones Newswires

SINGAPORE (Dow Jones)–European trader Vitol has provisionally chartered a supertanker to ship North Sea Forties crude to Asia loading early January, in what could be at least the third such arbitrage voyage in just over a month, according to a shipbroker and traders.

Vitol provisionally booked the Very Large Crude Carrier (VLCC), Great Lady, to ship 270,000 metric tons, or around 2 million barrels, of Forties crude loading at Hound Point Terminal, Scotland, on Jan. 3. A Singapore-based trader said the cargo may be loaded a few days later.

Exports of more North Sea crude will likely firm the European market, somewhat offsetting the bearish impact of Petroplus Holdings AG (PPHN.PB) recently shutting down three refineries.

The latest fixture would mean that a total of 6 million barrels of Forties will have left the North Sea for Asia between in just over a month.

Differentials in the North Sea market jumped on Tuesday as Shell sold two Forties cargoes to Vitol, one at a premium of 80 cents a barrel to Dated Brent, compared with quotes at discount of 15-30 cents for mid-January loading cargoes in the previous session.

The latest booking highlights rising crude flow from the West to East after resumption of Libyan crude exports, as Asian refiners try to take advantage of a surplus European market.

Cargoes of Brent-linked Russian Urals were also seen chartered to head to Asia in recent weeks.

Another cargo of North Sea crude will likely be shipped to Asia late January. Statoil ASA (STL.OS) was heard to have provisionally chartered VLCC Front Champion at $6.10 million for Jan. 21-23 loading from Mongstad port in Norway for shipping 2 million barrels to South Korea.

The Singapore trader said it could be carrying some Norwegian grades, presumably for storage in Asia, although this couldn’t be confirmed. Statoil operates storage facilities in South Korea.

South Korea is also a likely destination for the Forties cargo. Two similar December parcels shipped by Total SA (FP.FR) and BP PLC (BP.LN) were heard to be targeting Korean refiners.

A free trade agreement between South Korea and Europe that came into effect in July allows buyers to redeem 3% of the price, making arbitrage deals attractive at current levels.

A senior executive with a Korean refiner told Dow Jones Newswires in mid-December that the company was weighing the option of buying January-loading Forties crude as the arbitrage window appeared open.

The FTA with Europe and a sharp increase in crude prices by Middle East producers last month made the arbitrage attractive amid a narrow Brent/Dubai EFS, he said.

-By Gurdeep Singh, Dow Jones Newswires

LONDON (Dow Jones)–The U.K. has awarded 46 new licenses to explore for oil and gas in the North Sea, the Department of Energy and Climate Change announced on its website Friday.

The awards, part of the country’s 26th offshore oil and gas licensing round, came as the U.K. handed out 144 licenses in total. Companies to snap up the new exploration blocks include Royal Dutch Shell PLC (RDSA.LN), Germany’s Wintershall AG and France’s GDF Suez SA (GSZ.FR).

“These further licenses have been subject to rigorous examination, and we are now satisfied that initial exploration can go ahead,” said Energy Minister Charles Hendry.

“These continued high levels of interest, and the award today of these licenses, gives me yet more reason to be optimistic for a prosperous 2012 for the U.K. oil and gas sector,” Hendry added.

-By Alexis Flynn, Dow Jones Newswires

Ormonde Offshore Wind Farm – Turbine installation, © Ben Barden Photography Ltd.

STOCKHOLM — Swedish utility Vattenfall AB Friday announced plans to build an offshore wind farm in the North Sea after it recently bought the license for the new farm from German company Sandbank Power GmbH & Co.

The wind farm will be located off the German island Sylt in the North Sea and has the potential to provide more than half a million German households with electricity, the Swedish state-owned energy company said.

The project, called Sandbank 24, is part of Vattenfall’s ambition to invest SEK26 billion in wind power between 2011 and 2015 and follows Germany’s decision to phase out nuclear power over the next decade.

“With Sandbank 24 Vattenfall is actively supporting the ongoing energy turnaround in Germany,” Anders Dahl, head of Vattenfall’s renewables unit said in a statement.

The wind farm is initially for 576 megawatt from 96 large wind turbines, but can be expanded further as the deal includes the opportunity to expand the project with 40 turbines.

Construction is planned to start in 2014.

-By Katarina Gustafsson, Dow Jones Newswires

LONDON—BP PLC Thursday announced it would make its highest-ever annual investment in the U.K., despite a steep tax increase on crude production enacted earlier this year.

The British oil and gas producer said it would invest £4 billion ($6.30 billion) in the Clair Ridge field in the North Sea. The new investment brings its spending this year to £7.7 billion this year alone, and comes as it tries to get back on track after a number of high-profile setbacks that have constrained its ambitions in some overseas countries.

BP said the U.K. government has approved plans by it and partners Chevron Corp., ConocoPhillips and Royal Dutch Shell PLC to proceed with the second stage of its Clair Ridge project. BP and its partners plan to invest almost £10 billion in the North Sea over the next five years, the company said.

The decision to go ahead with the investment comes only months after the U.K. Treasury raised its top rate of tax on profits from North Sea production by 12 percentage points to 81%, a move that aroused intense opposition from the oil industry.

Critics have said the increase risked crimping further spending in the region. However, an independent tax and government spending watchdog, the Office for Budget Responsibility, has said the increase is unlikely to curb spending given the high oil prices.

BP on Thursday declined to comment on how the higher taxes had affected its decision to continue investing in Clair Ridge, saying only that “each company had different views on the tax.”

The company said the new U.K output would enable it to sustain a daily output of 200,000-250,000 barrels of oil equivalent a day until 2030.

The four BP-operated North Sea projects are part of a wave of new oil and gas developments around the world that the U.K. firm expects to come on stream over the next five years in countries such as Brazil and Angola, the company said.

At the same time, BP’s share price continues to lag other peers among integrated oil majors. BP and oil-field contractors are expected to face fines as early as this week from the U.S. related to the Deepwater Horizon disaster last year. Analysts say that unlike some of its peers, BP hasn’t received new deepwater drilling permits in the Gulf of Mexico. The company is also confronting a stream of litigation related to a proposed venture with OAO Rosneft that fell through.

Earlier this year, BP announced plans for the $4.7 billion redevelopment of the Schiehallion and Loyal fields, west of Shetland, and the $1.1 billion development of the Kinnoull field in the central North Sea.

Royal Bank of Canada analyst Peter Hutton said that the economics of the Clair Ridge project from data provided a few month ago looked “surprisingly attractive.”

“I think BP should be spending where they can get attractive returns, and that still includes the U.K.,” he said.

BP shares were recently down 8 pence, or 2%, at 404 pence, while the FTSE 100 was down about 0.8%.

By Alexis Flynn, Dow Jones & Company, Inc

ExxonMobil's Beryl B North Sea Platform, image by Gerry Gibb

By Isabel Ordonez And Alexis Flynn, Wall Street Journal

Apache Corp. is substantially expanding its U.K. presence by buying a number of ExxonMobil’s assets there for $1.75 billion.

The deal, expected to close by year end, highlights Apache’s strategy of acquiring mature oil fields and increasing their production further, while generating extra cash.

For ExxonMobil, the world’s largest public oil company, the move represents the opportunity to dispose of aging properties and reinvest the proceeds in opportunities that offer higher returns, says Fadel Gheit, an analyst with Oppenheimer & Co. Rivals Royal Dutch Shell PLC, BP PLC and Total SA have also recently sold mature North Sea assets in order to concentrate on more lucrative opportunities elsewhere, such as deep-water West Africa, Canadian oil sands or Arctic ventures.

Houston-based Apache, a sizable independent oil-and-gas company, has been on a spending spree recently. Last year it bought assets in Egypt and Canada from U.K. oil giant BP. It also acquired U.S. Gulf explorer Mariner Energy. The latest deal, which includes Exxon’s Beryl field and other operated and nonoperated producing assets, will add 19,000 barrels of oil equivalent and 58 million cubic feet of natural gas a day to Apache’s North Sea output, an amount that is expected to increase Apache production from the region by 54% and raise its proved reserves in the area by 44%.

Apache first invested in the North Sea in 2003 after it bought a 97% interest in the Forties field, the area’s largest, from BP. Its revitalization of the field turned the North Sea into Apache’s highest-returning asset, according to analysts with Simmons & Co.

Apache Chief Executive G. Steven Farris told investors in a conference call that company had tried for many years to buy more quality assets in the North Sea, an area that has “tremendous” growth potential.

“It took us eight years,” Mr. Farris said. The acquisition “represents clearly the best assets we have seen in the North Sea since Forties.”

Although the transaction is for $1.75 billion, Mr. Farris said that isn’t the amount of money Apache expects to pay in cash. Its payment to Exxon will be reduced by the cash flow generated by the business properties acquired from the effective date of the transaction, January 2011. The company will also benefit from a 40% tax credit it will receive from the U.K. government that could be applied to its existing income in that country.

UBS analysts estimates the final cash outlay for Apache could be about $875 million.

The deal includes ExxonMobil’s nonoperated interests in the Maclure, Scott and Telford fields and the Benbecula exploration acreage west of the Shetland Islands. Apache will also inherit Exxon Mobil’s work force in the North Sea, which the company said is made up of about 200 workers.

ExxonMobil said the sale wasn’t indicative of a desire to exit the U.K. completely, highlighting its continued share of 40 producing fields through the Shell and Esso joint venture and some refining and marketing assets in the country.

The transaction is subject to regulatory approval, Apache said. U.K. energy minister Charles Hendry said that the deal was “very positive” for the future of offshore oil production in the U.K., due to Apache’s record in the Forties field.

AP Photo/Santa Barbara News-Press, Mike Eliason

ABERDEEN, Scotland (Dow Jones)–The organization tasked with policing safety on U.K. North Sea oil and gas installations said Wednesday it is prepared to change the way it publishes information on leaks and other incidents, amid criticism of a lack of transparency around Royal Dutch Shell PLC’s (RDSA) recent spill at the Gannet Alpha platform.

“There has been pressure on us to be more transparent, there is more expected on this,” said Steve Walker, head of the Health and Safety Executive’s offshore division. “We could do it in a more attributable way.”

Walker said the HSE could by next year release more detailed information identifying companies responsible for safety and environmental breaches.

“There is now a drive for us to actually release that data [and say] ‘here is a hydrocarbon release by so and so on such a such a such date,’” said Walker.

Under the current system, interested parties have request data under the Freedom of Information Act, which allows citizens to obtain sensitive documents held by public service organizations.

However, criticism has mounted in recent weeks following an undersea pipeline leak at a Shell platform and the subsequent release of crude oil into the North Sea, the U.K.’s biggest spill in a decade. HSE data obtained under the Act showed the company to be among the worst offenders when it came to recent hydrocarbon releases.

Walker said any move to “name and shame” negligent operators would have to be done in accord with the industry.

“We are in discussions with Oil and Gas UK, because it is a sensitive issue, and if we are going to chance it we need to get the views of the industry, and I think they are pretty supportive of that,” said Walker.

-By Alexis Flynn, Dow Jones Newswires

Image Source: Vessel 'Skandi Arctic' courtesy Technip

Technip has been awarded a contract worth approximately €40 million from Maersk Oil for installation work in the North Sea.

The contract covers installation of 15 dynamic risers, 2 dynamic and 2 static umbilicals, 11 flexible flowlines as well as subsea equipment for the Gryphon Area Reinstatement Programme – GARP(1), located about 320 kilometers North-East of Aberdeen.

Technip’s operating center in Aberdeen, Scotland will be executing the contract, which is scheduled to be completed in the second quareer of 2012.

Technip says the vessels Skandi Arctic and Wellservicer will be used for the campaign.

These large and technologically advanced PSV’s have been designed to meet the demanding requirements for supporting deepwater and harsh environment activities, and are expected to operate in the North Sea market.

“Global market and economic conditions over the past three years gave us enough concerns to hold back on building new vessels,” said GulfMark President and CEO, Bruce Streeter. “However, recent oil and gas finds in the North Sea, a drilling focus on frontier areas and the announcement of more than 60 new offshore drilling rigs in 2011 gives us the confidence to initiate the building of vessels designed for this developing market. Forward contract visibility and increasing opportunities in areas demanding large sophisticated vessels indicate a strong potential for these additions to our fleet.”

The total cost of these three vessels is anticipated to be $120 million dollars, and the company says it plans on announcing additional vessels to the program over the next few quarters.

Delivery of the vessels is expected for the second quarter and third quarter of 2013.

Pictured: GulfMark Offshore’s PSV, M.V. HIGHLAND EAGLE

The announcement comes after a successful start to 2011.  Since January 1st, Aker has increased its order backlog by 19% and says the market outlook for both the UK and Norwegian North Sea, as well as Brazil, West Africa and Asia Pacific remains strong.

“Last year we decided to take a much more proactive recruitment approach. Since then our strategy has been to man up ahead of the big waves of work that we know are coming. That offers much greater predictability for our customers and ourselves,” says Alan Brunnen, a managing director with Aker Solutions in Aberdeen.

Aker Solutions will be adding 300 staff to its Aberdeen office and create 200 positions at its new west-London engineering office.

The majority of the positions in Aberdeen will be for the subsea technology business, where 200 new jobs will be created. An additional 70 positions will be added to support the maintenance and upgrading of existing North Sea oil platforms.  In addition, Aker Solutions’ well service business, which provides technologies and services for increasing oil recovery from producing wells, will require a number of technical and ancillary personnel. The company’s drilling technology business, which provides drilling systems and life-cycle services to support new generation drilling assets, will also require some new talent.

Meanwhile at its new offices in London, Aker Solutions aims to hire approximately 200 engineering personnel over the next year, with a target of 500 by the end of 2015. Located in Chiswick Park, the global engineering hub will support field development projects in the North Sea and worldwide.