Gina Krog 'overrun' for Statoil
Thursday 23 June 2016
Statoil is reportedly facing a cost overrun of as much as Nkr2 billion ($241.5 million) on its Gina Krog field development project off Norway, mainly due to foreign exchange effects as well as extra payments to ensure the field’s platform was delivered on time.
The main support frame for the topsides, along with process and utility modules, are set for sailaway shortly from South Korean fabrication yard Daewoo Shipbuilding & Marine Engineering after recently being loaded out onto a pair of heavy transport vessels.
State-owned operator Statoil is running behind schedule on development of the North Sea field that is now due for start-up in mid-2017, delayed from an original target of the first quarter of next year.
Its development director Morten Ruth told Upstream’s sister publication Dagens Naeringsliv the project has also racked up additional costs of Nkr2 billion - compared with the original budget of Nkr30.4 billion in 2013 - largely due to the relative weakness of the Norwegian krone against the dollar.
He also admitted that Statoil has made additional payments to Daewoo, apparently as performance incentives, to ensure timely delivery of the platform modules.
The South Korean yard was handed the Nkr6.1 billion contract to build the platform topsides in early 2013, with Norway’s Aker Solutions given a key engineering role, in one of a series of controversial awards by Statoil to Asian yards amid concerns over their ability to deliver on time and on budget.
However, Ruth attributed the cost overruns and delays on Gina Krog largely to problems with timely procurement and engineering issues.
He said procurement of equipment and services typically accounts for about half the cost of a fabrication project, with engineering and yard costs accounting for about 25% each.
Statoil has earlier announced delays and cost hikes on other fabrication projects in South Korea.
Its Mariner field scheme in the UK North Sea is now delayed by more than a year to the second half of 2018 from scheduled start-up in early 2017 while costs have also increased by slightly more than 10%, compared with the original budget estimate of $7 billion.
The project was earlier reported to be facing engineering challenges on fabrication of the platform topsides at Daewoo, mainly resulting from a decision to include drilling facilities on the unit that has led to increased complexity.
Furthermore, start-up of the Aasta Hansteen gas field being developed in the Norwegian Sea has now been pushed back to the second half of 2018 from the previous schedule of late 2017.
Costs on the scheme have also risen by 9% compared with the original budget figure of just over Nkr32.1 billion ($3.8 billion) given in the plan for development and operation, with an additional foreign currency effect pushing the overall cost up to Nkr37 billion.