Norway's Statoil has made a big oil find in the Arctic North, the firm said on Friday, breathing new life into Norway's declining oil prospects and lifting the company's shares to a 3.5-year high.
The company said the 150 to 250 million barrels of oil equivalent Skrugard discovery in the Barents Sea could potentially hold up to 500 million barrels and is the most significant off Norway in the last decade. It said a nearby prospect also looked promising. "This is fantastic, a breakthrough for us in this section of the Barents Sea," Gro Gunleiksrud Haatvedt, Statoil's head of exploration off Norway, told Reuters.
"This find will lead to a new boom in exploration in the area," said Magnus Smistad, an analyst at Fondsfinans. "This is an exciting area and the potential could be even bigger."
Statoil shares climbed 2.2 per cent to 156.7 crowns while shares in Italy's Eni, which has a 30 per cent stake in the licence, rose 1.85 per cent to 17.65 euros.
Norway is the world's fifth-largest oil exporter and the second-largest for gas but its oil output has been declining since 2001 and oil discoveries have become ever smaller.
In January Norwegian authorities slashed their estimates for offshore undiscovered oil and gas resources by 21 per cent to 16.4 billion barrels of oil equivalent, making the country less attractive to oil majors - until today.
"This discovery is the missing element needed to develop the Barents Sea into an oil province over the long-term," Norwegian Minister of Petroleum and Energy Ola Borten Moe said in a statement.
Finding oil in the Barents Sea has been tough. More than 80 exploration wells have been drilled there since 1980 but only two discoveries have been made - Statoil's Snoehvit gas field and Eni's Goliat oilfield.
Discovered in 2000, Goliat was the biggest oil find made in the Norwegian Barents Sea until now, with an estimated 240 million barrels in oil equivalent.
The find could lead to renewed concern about the impact of oil activity in a remote part of the Arctic, following the BP oil spill in the Gulf of Mexico.
Before drilling on Skrugard began last year, the Norwegian Polar Institute expressed worries about the potential impact of oil leaks that could get trapped in the Arctic sea ice, which extends to within some 150 kilometres north of Skrugard.
Mr. Haatvedt said Statoil would drill another well at Skrugard next year, which is about two-third oil and one-third gas, as well as another well at a nearby prospect.
"The other prospect has big potential, with a strong upside," the executive said, declining to offer more details. The third partner in the license is Norwegian state-owned firm Petoro, which holds a 20 per cent stake.
"It takes between 5 to 10 years from making a discovery to production, so we are planning for the future now ... "We want to start production as soon as possible," Statoil said, adding that it saw possibilities for a stand-alone production installation for Skrugard.