It is somewhat surprising that one of Europe’s energy powers, with one of the highest levels of development on the continent and the most experience in the oil world, has suffered the sudden paralysis of its greatest asset. Equinor, the Norwegian oil giant, announced on Monday that it had unexpectedly suspended production in the crown jewel, the oil field. Johan Sverdrupthe largest in Western Europe, due to a power outage on land, the company said through a spokesperson on Monday. This shutdown of the field that supplies Europe has generated some chaos on the crude oil market, which, added to tensions between Russia and Ukraine, has led the price of oil to increase by more than 3% in some countries. moments of the session.
The agency Reuters He collected statements from the company spokesperson, who assured that work was underway to restore production, but that it was not clear when it would resume. The outage was due to the appearance of smoke in an onshore electrical transformer which supplies phase 1 of the Johan Sverdrup project, according to the spokesperson’s statements.
The spokesperson clarified that the situation was not serious and could be resolved quickly (although the company has not yet confirmed the restoration of production), but that it resulted in a temporary halt in production on the entire Johan Sverdrup field. However, the power supply to other fields in the Utsira high water zone in the North Sea was not affected.
Equinor recently published that the Sverdrup field produced around 755,000 barrels of oil equivalent per day (bpd), a real record. The Johan Sverdrup field is located on the Norwegian continental shelf. In addition to being the largest crude oil field in Europe in terms of production, It is one of the largest and most significant oil discoveries in the history of the North Sea. The crude oil it produces is light fuel oil, low sulfurmaking it more sought after in international markets due to its lower refining requirements compared to heavier crude oils.
The importance of Norwegian energy for Europe has increased significantly following sanctions imposed on Russia, which led to a decrease in Russian oil and gas imports. Norway has thus become a crucial supplier to compensate for this loss and ensure the continent’s energy security. Johan Sverdrup, with his ability to produce up to 755,000 barrels per dayhas been instrumental in maintaining the stability of Norwegian exports and meeting Europe’s growing crude oil needs, particularly during times of uncertainty in global markets.
7% of all oil consumed in Europe
Just a few weeks ago, this Norwegian field reached a record daily production of more than 756,000 barrels of oil per daywhich equates to around 6-7% of daily oil consumption in Europe, according to Equinor. After the record, comes the decline: “We hope that Johan Sverdrup will leave this production set at the beginning of 2025”admitted Equinor CEO Anders Opedal during a press conference reported by Reuters. With this news, the Norwegian oil industry admits that the golden age may be behind it. Although the upward trend of this deposit was short-lived, it is also true that from the first moment large quantities of crude oil began to be pumped. This field has already pumped more than a billion barrels since it was commissioned in October 2019.
Although production cannot grow further on this field, it is now expected to stabilize slightly. below 756,000 barrels for several yearsso that it begins to gradually decrease from 2030, as revealed by the EIA and S&P Global. Technological advancements in the industry allowed more oil to be extracted per day than initially thought and, furthermore, decline or degradation could be managed effectively to prolong its production as much as possible.
40% of all Norwegian production
This field now accounts for more than 40% of Norway’s total crude oil production.which places it at the epicenter of the country’s oil industry. Most of its crude oil goes directly to Europe, since Norway consumes a very small amount, not only due to its small population, but also due to its strong commitment to renewable energy. Norwegian crude oil therefore flows largely to the United Kingdom, the Netherlands, Germany and France, which are heavily dependent on Norwegian energy supplies, particularly since the war in Ukraine. Norway also exports to some countries outside Europe, but its main goal is to meet European demand.
First of all, Its planned maximum production was 660,000 barrels per day.. However, the sophisticated Norwegian industry, led by Equinor (which has other projects in the pipeline), managed to raise this amount to the current record, increasing its potential by 100,000 barrels per day more than expected. However, crude oil is a finite good and its faster extraction means that the decline phase will come sooner, as previously discussed. Johan Sverdrup has gone through two development phases, one which began in October 2019 and the other in December 2022, which marked the big jump to current production levels. The United States Energy Information Administration (EIA) already announced a few months ago that the crude oil supply could begin to decline in 2024 or 2025.
To understand the importance of this deposit, it is enough to point out that the country’s second largest oil deposit (the Snorre deposit, also in the North Sea) produces around 95,000 barrels per day. In other words, Sverdrup pumps seven times more oil every day than the second largest field in the country.
