Letter of intent for the construction of the Johan Castberg hull
Statoil is signing a letter of intent with Sembcorp Marine Rigs & Floaters Pte. Ltd in Singapore for the construction of the hull and integrated living quarters for the floating production, storage and offloading (FPSO) vessel that will be located on the Johan Castberg field in the Barents Sea.
The contract will be signed at the final investment decision scheduled before Christmas.
Covering engineering, procurement and construction the contract has a value of NOK 4 billion.
The contract, which was won through international competitive bidding, marks an important milestone for the progress of the Castberg project. There were no Norwegian bids for the contract.
“We will be working closely with Sembcorp Marine to ensure safe and efficient delivery based on our requirements for HSE, quality, time and cost. The remaining procurement work will be progressed in parallel with this,” says Statoil’s chief procurement officer, Pål Eitrheim.
The construction of the hull is the most time-critical delivery for the completion of the Johan Castberg project for the scheduled start-up in 2022. The contract will have a separate cancellation clause linked to the approval of the plan for development and operation (PDO).
“Johan Castberg is the next major field development on the Norwegian continental shelf and important to future infrastructure in the Barents Sea. Analyses from Agenda Kaupang show that the project will generate some 47,000 man-years of employment in Norway in the development phase from 2018-2022 given a competitive Norwegian supply industry,” says Torger Rød, Statoil’s senior vice president for project development.
- The estimate for Norwegian content is approx. 50% in the project phase and about 80% in the operations phase for Castberg.
- The Johan Castberg field will generate ripple effects for all of Northern Norway. On behalf of the partnership Statoil has decided to locate the operations organisation in Harstad, whereas the helicopter and supply base will be located in Hammerfest. The Castberg project is actively pursuing ways of increasing the percentage of pre-qualified suppliers from Northern Norway.
- The Johan Castberg development is planned to consist of a large subsea system tied in to a FPSO vessel. Recoverable resources are estimated at 450-650 million barrels of oil equivalent. The field is located in the Barents Sea, 240 kilometres north-west of Hammerfest. 30 wells are planned to be drilled on the field in the period 2019-2024.
- The partnership consists of Statoil (50%), Eni (30%) and Petoro (20%).