Norway's $8 billion Johan Castberg offshore development begins oil production

(Bloomberg) -- Norway’s 86 billion kroner ($8.1 billion) Johan Castberg oil development in the Barents Sea has started pumping, the second major field to begin operations in the country’s Arctic waters. 

The project, developed by Equinor ASA and partner Var Energi ASA, will reach peak production of about 220,000 barrels of oil a day, Equinor said in a statement on Monday. The cost of the development should be covered in less than two years, with the field’s productive lifetime expected to extend for 30 years. 

The Norwegian government is keen to maintain its position as a key energy supplier to Europe, and sees the largely unexplored Arctic region as the main source of future output. Estimated to hold more than 60% of the country’s undiscovered hydrocarbons, the Barents Sea has long tempted the oil and gas industry, even as harsh conditions and the lack of infrastructure make developing the region difficult.

“Johan Castberg opens a new region for oil recovery and will create more opportunities in the Barents Sea,” Kjetil Hove, Equinor’s executive vice president for exploration and production Norway, said in the statement. “We’ve already made new discoveries in the area and will keep exploring together with our partners.”

With 12 of the 30 total wells ready, Johan Castberg is expected to reach plateau production in the second quarter of 2025, Equinor said. The company holds a 46% stake in the project, Var Energi 30% and Petoro the remainder. The field is estimated to hold recoverable hydrocarbon volumes of between 450 and 650 million barrels.