Could Valhall have been Danish?
Negotiations on a division of the North Sea were still under way between the Norwegian and Danish governments when Norway awarded its first production licences in August 1965. The boundary with Denmark was still only temporary.
Value creation 1982–2012
The Valhall field at the southernmost end of the Norwegian continental shelf (NCS) was discovered in 1975 and came on stream in October 1982. Recoverable oil reserves were initially calculated to be 247 million barrels, with production expected to last for roughly 20 years.
Licensees on Valhall and Hod
Hess Norge AS has been the majority licensee for Valhall and Hod since 1 January 2010, with 64.05 and 62.5 per cent respectively. Operator BP Norge AS has 35.95 and 37.5 per cent.
BP and Amoco in giant oil merger
One of history’s biggest industrial mergers was announced on 11 August 1998 by British Petroleum (BP) and USA’s Amoco. The two sides had managed to keep their extensive negotiations secret. Worth almost USD 840 billion, the new group was one of the world’s three largest oil companies along with Exxon and Shell. The market responded positively, with BP’s share price jumping 15 per cent and Amoco shares also seeing a rise – at a time when a fairly gloomy mood prevailed in the global oil sector. Crude oil prices had dropped to USD 10 per barrel, their lowest level since the dramatic slump of 1986.
Rows over royalties
The obligation to pay a royalty to the government on production from Valhall was abolished on 1 January 2000. That marked the end of an issue which had been a source of much contention, several legal actions and, finally, compromises between the authorities and various oil companies – including Amoco.
Sale of Noco
Norwegian Oil Consortium (Noco) achieved its first ever good financial results in 1989. Production from Valhall was going well, with the well problems overcome, and oil prices were rising. The company was a money machine, according to the press. So it might seem strange that Noco’s owners resolved in August 1990 to sell the whole company. But they had several motives for this action.
Tax protest from Amoco
The Norwegian fiscal regime for the offshore sector was no more onerous than in other oil-producing countries when the first licensing round was held in 1965. By the early 1980s, however, the tax burden on the industry had risen to a record 85.8 per cent. Amoco Norway was then one of the oil companies which led the way in expressing the strongest dissatisfaction with the level of Norwegian taxes.
Noco – small but attractive
Norwegian politicians long considered the model with one state-owned, one part-state-owned and one private oil company to be ideal. As the last of these enterprises, Saga Petroleum was assigned an increasingly important role in Norway’s offshore sector during in the early 1980s.
Inaugurating the Valhall field
Valhall began production on 1 October in 1982, making Amoco Norway Oil Company – as operator for the Amoco group – the fourth company to bring a field on stream off Norway.
Financing the Valhall development
The various licensees on Valhall had different starting points for funding its development. Operator Amoco Norge as well as Amerada Hess and Texas Eastern were backed by international parents for part of their contribution, but also needed to borrow. Noco had no money and would have to cover its whole share with loans. The question was who could lend money to the oil companies for such huge investments. Were opportunities available in the Norwegian market, or would the borrowers have to go abroad?
Valhall orders for crisis-hit yards
International tanker shipping had been a growth industry in the postwar years and was enjoying a fantastic boom in 1973. High freight rates meant good profits for shipowners, and worldwide orders for new crude oil carriers corresponded to 55 per cent of the existing fleet.
Amoco relocates to Stavanger
Amoco Norway Oil Company moved, like a number of other oil companies, from Oslo to the Stavanger area in 1974. The aim was primarily to improve contacts with the recently established Norwegian Petroleum Directorate (NPD) and state oil company Statoil, and with licence partners. Offices were leased at the Aker Norsco base in Tananger.
The creation of Saga Petroleum
The AmocoNoco group began drilling well 2/5-1 at the southern end of Norway’s North Sea sector on 1 August 1970. Oil and gas were proven at 3 972 metres beneath the seabed before the well was plugged and abandoned on 22 November. This discovery lay close to the Ekofisk field and was named Tor. Although not large, it could be brought into production as part of the development of the Ekofisk area. Finding oil gave a substantial boost to the self-confidence of the group, and its Norwegian industrial and shipping members felt they were now strong enough to manage without foreign partners.
AmocoNoco starts to drill
Applications were submitted by the AmocoNoco group for 40 of the 278 blocks put on offer in Norway’s first offshore licensing round, and was awarded 10 blocks in three production licences. It also received two further blocks in December 1965. Two of the blocks secured by the consortium were among the most interesting in the first Norwegian round – 2/5 and 2/8. Discoveries in this acreage were to include Tor, South-East Tor and Valhall.
AmocoNoco group seeks licences
Noco confirmed in a telex to Amoco on 28 April 1965 that the two would jointly apply for production licences on the Norwegian continental shelf (NCS). That marked the end of the consortium’s wide-ranging search for an international partner. An offer from Phillips Petroleum which could have made Noco a part-owner of the huge Ekofisk field came a few hours too late, after the decision to join forces with Amoco had been made. Oil exploration on the NCS at that time was a lottery. Although seismic surveys gave some clues about the location of promising areas, nobody knew which acreage they would get and what was to be found beneath the seabed in the various blocks.
Norwegian interests get involved offshore
Norway’s first offshore licensing round in 1965 embraced 278 blocks in the North Sea. Groups of companies were responsible for most of the 11 applications received, with Norwegians involved in two of these. Norsk Hydro was a member of the Petronord group with two French oil companies, while Norwegian Oil Consortium A/S & Co (Noco) – the first wholly private Norwegian oil company – participated with Amoco, Texas Eastern and Amerada in the AmocoNoco group.
Loading more articlesnavigate_next
No filter selected.