Equinor takes £ 225million on Mariner one year after first oil

Equinor took a £ 225million depreciation charge on the value of its Mariner asset, a year after reaching first oil.

In the recently released accounts of its UK subsidiary, the Norwegian energy company revealed that the depreciation was carried out in the first quarter of this year, largely due to the collapse in oil prices caused by Covid.

The depreciation is also due to adjustments to reserves and production estimates at Mariner, the company said.

An Equinor spokesperson said: “During 2020, Mariner’s assets were impaired due to reduced future oil price assumptions as well as adjustments to the production profile and estimate of oil prices. reserves, reflecting a better understanding of the reservoir after the first year of production. “

At the time of start-up last year, Equinor said 300 million barrels were recoverable from the Mariner field.

Oil companies around the world have suffered major asset write-downs in the wake of Covid – ExxonMobil being a prime example, taking the largest depreciation in modern history of up to $ 20 billion (£ 15 billion ).

Closer to home, Taqa took a £ 339million hit on its UK assets in the North Sea, also triggered by the Covid-19 pandemic impacting the price of oil.

Mariner was launched in September 2019, following a £ 6.4bn investment from the energy company, one of the largest in the UK sector for a decade.

The field, 95 miles east of Shetland, is expected to continue producing until 2050.

Equinor said safe operations continued throughout 2020.

In the accounts, the company said: “Mariner’s assets were subject to an impairment charge of £ 226 million during the first quarter of 2020.

“This was due to a significant reformulation of production volumes from the short term to the longer term in addition to the drop in prices in the short term.”

Equinor is the operator of Mariner with a 65.11% stake. The partners are JX Nippon (20%), Siccar Point (8.89%) and ONE-Dyas (6%).

The heavy oil field was first discovered in 1981, but it took decades for the industry to figure out how to make it viable, with Equinor submitting a development plan for the field in 2012.

Construction began in 2013 with the installation of the 22,000 ton platform jacket two years later.

Last year, Equinor estimated that up to three billion barrels were in place at the oilfield, its first asset to operate in UK waters.

The company’s next target is the Rosebank project in the West Shetlands, although an investment decision has been postponed until 2022.

At the start of the year, Equinor sold part of its stake in another project, Bressay, to EnQuest, which became its operator.

Located just 30 miles northeast of Mariner, Bressay is considered even more complicated and has been on the sidelines since 2007.

EnQuest plans to develop the field through its FPSO Kraken, another heavy oil field, with the produced gas that will be used as fuel for the vessel, thereby reducing emissions.

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Felix J. Dixon

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