Equinor has warned that the estimated cost of developing a new Arctic oilfield increased by almost one billion pounds over the past year.
The Johan Castberg project in the Barents Sea is now tipped to cost 80 billion Norwegian crowns (NOK) - NOK13 billion (£0.98 billion) more than last year’s anticipated price tag.
“Costs are increasing due to a larger than expected scope of work and cost increases in the industry,” Equinor said in a Tuesday statement.
Pandemic-induced delays have hit the project since it began in 2017, the Norwegian state-owned company explained, while inflationary pressures and currency weakness have also weighed in.
Though the price tag has climbed significantly from the NOK57 billion anticipated in 2017, Equinor reassured drilling at the field remained viable.
“Johan Castberg is still a good project with a solid economy,” Equinor vice president Geir Tungesvik added.
“With a breakeven of around US$35 per barrel, Johan Castberg will provide substantial revenue [...] for 30 years.”
The field in estimated to hold between 450 million and 650 million barrels of oil, with Equinor targeting daily production of 190,000 barrels.