Norway's Castberg oilfield finally starts production

Norway’s Johan Castberg oilfield in the Barents Sea has finally begun production, its operator Equinor announced on March 31, marking the second major oil project to come on stream in the country’s Arctic waters.

The NOK86bn ($8.1bn) development was originally slated to start up in 2022, but delays in constructing its floating production storage and offloading (FPSO) vessel – exacerbated by the COVID-19 pandemic – pushed back the timeline. Since the project was first approved, its cost has also inflated by a third.

Nevertheless, Equinor expects investments in the project to be recovered in under three years, with production set to reach a plateau of around 220,000 barrels per day (bpd) by the end of June. Twelve of the 30 planned wells are already operational, and drilling will continue until late 2026. The field’s production life is anticipated to last three decades, with estimated recoverable volumes ranging between 450-650mn barrels of oil.

“Johan Castberg opens a new region for oil recovery and will create more opportunities in the Barents Sea,” Equinor’s executive vice president for exploration and production in Norway, Kjetil Hove, commented. “We’ve already made new discoveries in the area and will keep exploring together with our partners.”

Those satellite discoveries could add a further 250-550mn barrels to the recoverable oil base.

The Norwegian government views the Barents Sea – believed to contain more than 60% of the country’s undiscovered hydrocarbon resources – as key to maintaining its role as a major energy supplier to Europe. However, exploration and development have been hindered by challenging conditions and a lack of infrastructure in the Arctic region.

Johan Castberg will be the second oil-producing asset to come on stream in the Barents, following the launch of Vaar Energi’s Goliat field in 2026. That project had a capacity of 100,000 bpd, but output had fallen to only 22,000 bpd as of last year.

The Barents is also home to Equinor’s Snovhit gas field, which provides feedstock for the Hammerfest LNG terminal. 

Equinor holds a 50% operating stake in Johan Castberg, with Vaar Energi owning 30% and state-owned Petoro holding the remaining 20%.