The Johan Castberg oil field in the Barents Sea marks a milestone in the exploration of Arctic energy resources. With an expected capacity of 220,000 barrels per day, it is becoming a key foundation for the future exploitation of this largely underexplored region. The project meets Europe’s energy supply needs as the North Sea oil fields approach the decline phase. The Castberg project is scheduled for completion in the fourth quarter of 2024 and its strategic location could accelerate other projects in the region, including the Wisting field, which is even further offshore.
Interest in the region is being driven by new seismic imaging technologies that are enabling a better understanding of potential resources. These technological advances provide more precise images, allowing new deposits to be identified, paving the way for increased exploration. As a major energy supplier to Europe, Norway must diversify its resources and maintain its production capacity, despite infrastructure challenges in the Arctic.
The Arctic Gas Transport Dilemma
One of the main challenges for gas development in the Barents Sea is the transportation of resources to European markets. Currently, gas from the region is processed at the Melkøya liquefaction plant, but this facility is already being used at full capacity by the Snøhvit field. In the short term, a solution must be found to transport the additional volumes of gas, as Europe, especially after 2025, will face a significant reduction in gas deliveries from the North Sea.
A proposed new gas pipeline from the Barents Sea to Norway’s existing network, supported by pipeline operator Gassco, could be one solution, but it depends on the discovery of sufficient volumes to justify such infrastructure. Equinor, the main operator in the region, continues to evaluate this option while investing in exploration to maximise the region’s gas potential. However, building new pipelines poses considerable logistical challenges, particularly due to the remoteness of the facilities.
Exploration prospects despite uncertainties
Despite the challenges, the future of exploration in the Barents Sea looks promising. The latest seismic campaign in the region has revealed new prospects for oil and gas companies. In contrast to the areas near the Russian border, which have so far been relatively unproductive, attention is now turning to the western Barents Sea, closer to the Norwegian Sea. Discoveries of gas or oil in this area would be decisive in motivating new investments in transport infrastructure.
However, the current situation reflects a classic “chicken and egg” problem: the lack of infrastructure is holding back exploration investment, and the lack of discovered resources is holding back infrastructure development. The potential therefore remains largely untapped, despite technological advances. Companies such as Var Energi, in partnership with Equinor, continue to play a central role in these developments, but further efforts will be needed to ensure a sustainable future for the industry in this region.
The decline of North Sea fields: a challenge for Norway
At the same time, the North Sea oil and gas sector is facing a major challenge. Large fields such as Johan Sverdrup, which came online in 2019, are approaching peak production, and the expected decline by the end of the year is a source of concern. Norway, which depends on these resources for its energy exports, will have to step up its exploration efforts in other areas to compensate for this decline.
The existing infrastructure, while robust, may not be sufficient to cope with a rapid decline in volumes. The future of the export system, which supplies several European countries and the United Kingdom, may require significant adjustments over the coming decades. Gas and oil flows could be redirected, but this will take time, and the success of these adjustments will largely depend on Norway’s ability to maintain its production levels.
An evolving regulatory framework
Norway’s regulatory framework has also adapted to environmental concerns, limiting new exploration licenses to already known areas under the “pre-definition” regime instead of the traditional, more expansive numbered licensing rounds. This restriction is currently holding back exploration in more remote areas, but some observers predict a return to more open rounds after the 2025 elections.
Despite this development, the Norwegian industry maintains a strong base with players engaged in exploration and exploitation, such as Aker BP and Harbour Energy, seeking to maximise the opportunities offered by existing resources. However, in the long term, Norway will need to reassess its strategy to remain a key supplier of energy to Europe as demand continues to grow.
