Norway, Britain treaty designed to stimulate North Sea development

Norway and Britain on July 1 approved the first two offshore oil fields under a new treaty for cross-border cooperation.

The treaty, signed in April, is intended to stimulate development of oil and natural gas fields that straddle the North Sea median line between the countries.

Although the fields, called Blane and Enoch, are relatively small, a Norwegian oil ministry statement called the joint approvals “important milestones in the bilateral cooperation.” The new treaty is intended to encourage development of cross-border fields at a time when the world thirsts after more oil with crude prices at record levels of about US$60 per barrel.

“Over the last years, the cooperation between UK and Norway has improved,” said Norwegian Oil Minister Thorhild Widvey in a statement. “I am excited to observe that the new Framework Agreement for Trans-boundary Projects signed in April 2005, now transpose into new projects.” In the past trans-boundary fields like Enoch and Blane had to be handled with individual treaties between Britain and Norway.

The new framework treaty includes projects not already outlined in other agreements, and covers such things as building joint oil and natural gas pipelines, jointly developing median-line fields and using infrastructure on one side of the border to develop resources in the other country’s waters.

Norway, the world’s third largest oil exporter, has encouraged development of new fields to shore up the decline in its production of 3 million barrels per day plus natural gas. Britain is also an offshore oil and gas producer, and some border-straddling projects, such as Statfjord, Frigg and Murchison, are already in production.

The Blane field is partly in British waters, and partly in Norwegian waters. When developed by the Paladin Expro Ltd. by the end of 2006, the field is expected to produce about 14,000 barrels of oil per day. The Enoch field also lies in shared waters, and is expected to begin producing about 12,000 bpd when development, also led by Paladin, is completed by late next year.

—The Associated Press