Statoil well 'could risk turf war'

Crossing the line?: waters off the Svalbard islands

A frontier wildcat to be drilled by Statoil in the northernmost part of Norway’s Barents Sea reportedly could run the risk of a territorial row with other countries if a discovery is made in Arctic waters off the Svalbard archipelago.

The state-owned explorer is targeting a well likely to be drilled early next year with Seadrill semi-submersible West Hercules at the Apollo prospect, about 50 kilometres north of OMV’s recent Wisting discovery that has opened up a new play in the so-called Hoop area.

The probe is one of two to be drilled in 2014 – with a second planned at the Atlantis prospect – in Statoil-operated production licence 615 that borders the 74th latitude and is therefore close to an area governed by the 1920 Svalbard Treaty.

While Norway claims the pact only covers onshore areas, other signatories including the UK and Russia could argue that they also have a claim to any hydrocarbon resources that are found off the Arctic archipelago, a regional expert has been reported as saying.

“If a discovery is made at Apollo, this could stretch into the so-called Svalbard zone and that will again pose the question as to whether Svalbard has its own offshore area. Everyone accepts this, except Norway,” North Energy chairman Johan Petter Barlindshaug told Norwegian publication Teknisk Ukeblad.

“This is so close to [the area covered by the treaty] that other countries will believe they should be consulted. If there are business interests at stake, things could get heated,” he added.

The treaty defines co-ordinates that are said to encompass so-called Svalbard offshore blocks north of the 74th latitude, he pointed out.

The agreement delimits Svalbard as islands within the 10th and 35th longtitudes and between the 74th and 81st latitudes, but does not mention offshore areas.

Norway reportedly believes the treaty only provides equal economic access to the islands and their territorial waters, and that the continental shelf off Svalbard is part of its own, a position disputed by other signatory countries.

Barlindshaug pointed to a recent report presented on behalf of the British government by European Union vice president Diana Wallis that set out proposed territorial guidelines for the area off Svalbard in an apparent challenge to Norway’s sovereignty claim.

“The report indicates the UK is preparing to provoke Norway on this issue,” he said, adding the document “instigates an escalation”.

He believes Norway must now come to the negotiating table with other signatory countries to forestall a possible territorial dispute in the event of a hydrocarbon discovery.

“Norway cannot possibly benefit from allowing this to become an area of dispute and therefore has two alternatives – to concede [its claim] or find an alternative solution,” he said.

Statoil was recently awarded two additional exploration licences – PLs 615B and 723 – in Norway’s latest 22nd licensing round that lie north of the 74th latitude.

The Hoop wildcats are part of a wider Barents drilling campaign being carried out by Statoil, with other probes targeted this year at the Skavl and Kramsno prospects in PL 532 to the south of its Johan Castberg discovery after two earlier wells at Nunatak and Iskrystall yielded disappointing gas finds.

Drilling kicked off last week of the 7220/7-2 probe at Skavl in a water depth of 349 metres, with an expected duration of 42 days.

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