Equinor Energy and its partners Vår Energi, and Petoro have increased the investment estimate for the Johan Castberg project in the Barents Sea offshore Norway by nearly NOK13bn ($1.2bn) to NOK80bn ($7.41bn).

The increase in the cost estimate of the offshore oil project is attributed to both the expanded scope of work and rising costs within the industry.

However, Equinor has confirmed that the schedule for commencing production in Q4 2024 remains unaltered.

In 2017, when the development and operation plan (PDO) was initially submitted, the projected cost stood at NOK57bn ($5.3bn) for the year 2023. Since then, project expenses have escalated by NOK15.5bn ($1.4bn), along with a currency impact of slightly over NOK7bn ($650m).

Equinor projects, drilling and procurement executive vice president Geir Tungesvik said: “Costs are increasing due to a larger than expected scope of work and cost increases in the industry, we take this seriously. However, Johan Castberg is still a good project with a solid economy.

“With a breakeven of around USD 35 per barrel, Johan Castberg will provide substantial revenue and ripple effects to the community from the Barents Sea for 30 years.”

Last year, the Johan Castberg hull, along with the living quarters, was transported from Singapore to Stord for installation and commissioning. The primary factor behind the increase in the investment estimate compared to the previous year is the greater extent and complexity of the workload transferred to Stord than initially anticipated.

Moreover, the Johan Castberg project has experienced deviations from the planned timeline. Additionally, due to market cost developments, the expenses related to marine operations, drilling, and completion have also gone up.

Besides, the offshore oil project was impacted by infection control measures and reduced labour access due to the Covid-19 pandemic. The influence was felt in both Singapore, where the hull and living quarters for the production vessel were built, and in Norwegian yards where modules for the production facility were under construction, said Equinor.

The estimated proven volumes in the Johan Castberg field range from 450 to 650 million barrels of oil. The vessel has been designed for a daily production capacity of nearly 190,000 barrels.

Situated about 100km north of the Snøhvit field, Johan Castberg is made up of three oil discoveries, Skrugard, Havis, and Drivis, all within production license 532. The field is anticipated to have a 30-year production lifespan.

Equinor Energy has an operating stake of 50% in the field, while Vår Energi and Petoro have stakes of 30% and 20%, respectively.