It is somewhat surprising that one of Europe’s energy powers, with one of the highest levels of development on the continent and with the most experience in the world of oil, has suffered the sudden paralysis of its largest asset. Equinor, the Norwegian oil giant, announced this Monday that it had unexpectedly suspended the production of the jewel in the crown, the oil field Johan Sverdrupthe largest in Western Europe, due to a power outage on land, the company said this Monday through a spokesperson. This stoppage of the field that feeds Europe generated some chaos in the crude oil market, which, added to the tensions between Russia and Ukraine, led the price of oil to rise more than 3% at some points in the session.
The agency Reuters collected the statements from the company spokesperson, who assured that work was being done to restore production, but it was not clear when it would resume. The outage was due to the appearance of smoke in an onshore electricity transformer that sends power to phase 1 of the Johan Sverdrup project, according to the spokesperson’s statements.
The spokesperson clarified that the situation was not serious and could be resolved quickly (although the company has not yet confirmed the restoration of production), but it led to a temporary stoppage of production at the entire Johan Sverdrup field. However, power supply to other fields in the Utsira High area in the North Sea was not affected.
Equinor recently published that the Sverdrup field is producing about 755,000 barrels of oil equivalent per day (bpd), a true record. The Johan Sverdrup field is located on the Norwegian continental shelf. In addition to being the largest crude oil field in Europe by production, It is one of the largest and most important oil discoveries in the North Sea in history. The crude oil it produces is light oil, with a low sulfur contentmaking it more desirable in international markets due to its lower need for refining compared to heavier crude oils.
The importance of Norwegian energy to Europe has grown significantly following the sanctions imposed on Russia, which has led to a decrease in imports of Russian oil and gas. Norway has thus become a crucial supplier to compensate for this loss and ensure the continent’s energy security. Johan Sverdrup, with his ability to produce up to 755,000 barrels per dayhas been instrumental in keeping Norwegian exports stable and in meeting the growing crude oil needs in Europe, especially in times of uncertainty in global markets.
7% of all the oil consumed by Europe
Just a few weeks ago, this Norwegian field reached a record daily production of more than 756,000 barrels of oil per dayequivalent to around 6%-7% of Europe’s daily oil consumption, according to Equinor. After the record, comes the decline: “We expect Johan Sverdrup to leave this production plateau at the beginning of 2025”admitted the CEO of Equinor Anders Opedal in a press conference reported by the Reuters agency. With this news, the Norwegian oil industry admits that the golden era may have been left behind. Although the upward trend of this field has been short-lived, it is also true that from the first moment it began to pump large quantities of crude oil. This field has already pumped more than 1 billion barrels since it came online in October 2019.
Although production will no longer be able to grow further at this field, it is now expected that production will stabilize slightly below 756,000 barrels for a few yearsso that it begins to fall progressively from 2030, as revealed by the EIA and S&P Global. The advancement of technology in the industry has made it possible to extract more oil per day than was initially thought and, in addition, decline or decay could be managed efficiently to prolong its production as much as possible.
40% of all Norwegian production
This field now represents more than 40% of Norway’s total crude oil production.which places it at the epicenter of the country’s oil industry. Most of its crude oil goes directly to Europe, since Norway consumes a very small amount of crude oil, not only because of its small population, but also because of its strong commitment to renewable energies. In this way, Norwegian crude oil largely flows to the United Kingdom, the Netherlands, Germany or France, which are highly dependent on Norwegian energy supplies, especially since the war in Ukraine. Norway also exports to some countries outside Europe, but its main focus has been on meeting European demand.
At first, Its maximum planned production was 660,000 barrels per day.. However, the sophisticated Norwegian industry, led by Equinor (which has other projects underway), has managed to raise this amount to the current record, raising its potential by 100,000 barrels per day more than expected. However, crude oil is a finite good and extracting it faster means that the decline phase will arrive sooner, as noted previously. Johan Sverdrup went through two development phases, one that began in October 2019 and another in December 2022, which marked the great leap to current production levels. The US Energy Information Administration (EIA) already announced a few months ago that the crude oil field could begin to decline in 2024 or 2025.
To understand the importance of this field, it is only necessary to point out that the country’s second most important oil field (the Snorre field, also in the North Sea) is producing about 95,000 barrels per day. That is, Sverdrup pumps seven times more oil every day than the second largest field in the country.
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