HIGH INTEREST IN NORWEGIAN CONTINETAL SHELF LICENSE AWARDS

UNCLAS OSLO 000033 STATE FOR EUR/NB, EEB/ESC SENSITIVE SIPDIS ¶E. O. 12958: N/A TAGS: EPET EINV SENV ECON NO SUBJECT: HIGH INTEREST IN NORWEGIAN CONTINETAL SHELF LICENSE AWARDS AND NOMINATIONS REF: A. Oslo 697 ¶1. (SBU) Summary: U.S. companies participated in a high-interest nomination round for Norwegian Continental Shelf (NCS) licenses. The GON also awarded licenses in a separate predefined/mature areas licensing round. The high interest sends positive signals about the competitive situation on the shelf, but the oil and gas industry continues to call for clear political signals about future NCS development. End Summary. High Interest, Despite Not-So Attractive Acreage -------------- --- ¶2. (SBU) The Norwegian Continental Shelf 21st licensing round nomination period concluded on January 13, drawing significant industry interest. 43 companies participated n the nomination round, and 307 blocks or parts of blocks have been nominated, 138 of which by two or more companies. U.S. majors submitting nominations included Chevron, ConocoPhillips, ExxonMobil, Hess and Marathon. The Petroleum Directorate will now evaluate the nominations, and licenses are set to be awarded in the spring of 2011. ¶3. (SBU) The 21st licensing round announcement drew surprise reactions in November, coming so soon after the 20th round, and industry complained that the acreage open to nominations was almost exclusively in mature fields (reftel). However, it seems companies are eager to have what they can get, and the high level of industry interest shows commitment to sustaining high activity levels on the NCS. Though company participation is slightly lower this time around (43 vs. 46 in the 20th round),it is still much higher than in the 17th, 18th, and 19th rounds, in which only between 14-19 companies participated. Some of this is explained by the formation and entry of new companies working on the NCS, but that again may be taken as a positive sign for the competitive situation on the NCS, overall. Filler-Round -------------- ¶4. (SBU) This week, the Ministry of Petroleum also announced the results of the seventh Predefined Acreage licensing round. This is a separate and more regular system of licensing, "a filler-round", focused on minor blocks in mature areas near existing installations. 38 licenses were awarded, and U.S. companies received stakes in 10 of these. ¶5. (SBU) Comment: Despite strongQndustry interest in both of these license rounds, and the active presence of nearly 50 petroleum producing companies on the NCS, the GON is still unable to commit to opening of fresh acreage in northern waters. Norwegian authorities state that they interpret the high interest levels as a sign that industry is happy with the current speed and form of licensing, while the feedback Post gets from industry is that new acreage needs to be opened soon, and that active participation in these minor rounds is simply a way of maintaining stable operations while anticipating the awarding of significant new areas. Opening new acreage continues to be politically controversial given the opposition to the idea from the Socialist Left and Center parties, both junior partners in the governing Labor Party coalition. End Comment. WHITE