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Norway raises cost estimates for two oil and gas fields

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Norway raises cost estimates for two oil and gas fields
FILE PHOTO: The logo of Equinor, formerly known as Statoil, at the company's headquarters in Fornebu, Norway, May 21, 2018. REUTERS/Nerijus Adomaitis/File Photo   -   Copyright  Nerijus Adomaitis(Reuters)
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OSLO (Reuters) – The cost of developing two major Norwegian oil and gas fields has increased due to the complexity of the projects, with the start of production delayed for one of them, the government and operator Equinor <EQNR.OL> said on Monday.

Equinor said the investment forecast for the Martin Linge field had risen to 56.1 billion Norwegian crowns (£5.01 billion) from an estimated 47.1 billion, with its start-up delayed until the third quarter of 2020 from the first quarter.

“Martin Linge is a complex project, and the scope of work has increased. This means increased costs and somewhat more time before we can start production,” the state-controlled oil company said in a statement.

The 256 million barrels of oil equivalents field in the northern part of the North Sea was originally estimated to cost 30 billion crowns, when French company Total <TOTF.PA> submitted development plans to the Norwegian government in 2012.

Equinor took over operating the field in March 2018 after buying a 51% stake from Total for $1.45 billion. It now has a 70% stake in the field’s license, and state-owned Petoro holds the rest.

Government budget documents released on Monday also showed the cost of Equinor’s project to redevelop the Njord field in the Norwegian Sea would increase by 4.4 billion crowns to 20.3 billion crowns compared with the previous estimate a year ago.

“The work to upgrade the Njord A platform and the Njord Bravo storage ship has also been more comprehensive than expected,” Equinor said.

The field, which has been shut since 2016, is expected to start producing again in the last quarter of 2020, as previously anticipated.

German company Wintershall Dea holds a 50% stake in the field’s license, Equinor has 27.5% and private-equity backed British oil and gas firm Neptune Energy has 22.5%.

(Reporting by Nerijus Adomaitis, Editing by Terje Solsvik and Mark Potter)

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