Edvard Grieg

Lundin Petroleum Cuts 2015 CAPEX by 31 Percent

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January 7, 2015

Edvard Grieg platform, rendering courtesy Lundin Petroleum

reuters logoOSLO, Jan 7 (Reuters) – Swedish oil firm Lundin Petroleum , which is working on the giant Johan Sverdrup field in the Norwegian sector of the North Sea, will cut its capital spending by 31 percent to $1.45 billion in 2015, it said on Wednesday.

Lundin will focus its expenditure on finishing its ongoing projects and its overall field development budget will fall by 30 percent, exploration spending will drop by 27 percent and appraisal work will be down by 48 percent, it said in a statement.

Oil companies around the world are slashing investments save on costs as the more than 55 percent fall in crude prices in the past six months is draining their cash flow.

“We have a strong balance sheet and I expect our 2015 capital programme to be fully funded from internally generated cash flow and bank debt,” Chief Executive Ashley Heppenstall said.

“The major focus of our 2015 capital budget will be the completion of our development projects on Boeyla, Bertam and Edvard Grieg which will increase our production to 75,000 barrels of oil equivalents per day.”

However, the spending figures do not include Johan Sverdrup and Lundin expects to firm up those figures only after the field’s development plan is submitted in February.

Sverdrup, operated by Statoil is expected to cost up to 120 billion Norwegian crowns ($15.5 billion) but it is not clear how much each shareholder will have to put in as the companies involved have yet to agree on precise stakes in the field.

Sverdrup is expected to come onstream in late 2019 and at its peak, once the second phase is completed, it will produce up to 650,000 barrels of oil equivalents per day.

Sverdrup is owned by Statoil, Lundin, Maersk, Det norske, and Norwegian state holding firm Petoro. (Reporting by Balazs Koranyi, editing by Terje Solsvik and Louise Heavens)

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