It has long been part of Stavanger’s cityscape. The giant Jotun ship has been moored at Worley Rosenberg’s shipyard since 2020. Around 1,500 workers are working daily to get the Jotun clapped and ready for sailing. The production ship should actually have been in place in the North Sea as early as 2022. But it is still there, costing Norwegian taxpayers billions of kroner. Jotun is part of the Balder Future project. When operator Vår Energi submitted a plan for development and operation (PUD) in 2020, the company believed that the project would cost NOK 22.6 billion. Now the price is 52.2 billion, according to the state budget for 2025. So an increase of 121 per cent. Process equipment, hull, pipes and housing section are some of the things being fixed at Rosenberg. Photo: Thomas Ystrøm / news The Jotun ship makes up the bulk of the cost increases. Only the excesses are the same as the entire price tag for New Stavanger University Hospital. And because of the tax rules, it is Norwegian taxpayers who have to pay the bill. Inadequate planning Until recently, the plan was to get the ship out on the shelf this summer, but now everything has been postponed to spring next year. The corona pandemic and increased prices for goods as a result of the war in Ukraine – and problems with getting them delivered on time are some of the reasons. – In addition, the scope of work has become more extensive, especially related to the upgrade of the Jotun FPSO, says communications advisor Siri Tjelta in Vår Energi. The Jotun ship will extend the life of the very first license on the Norwegian continental shelf: PL001. Photo: Thomas Ystrøm / news Vår Energi has received criticism from the Norwegian Maritime Industry Authority (Havtil) for what they call a “lack of realism” in the implementation plans for the project. The inspection has concluded three breaches of the regulations: Inadequate planning Inadequate management of deviations Inadequate collection and processing of information Siri Tjelta says that Vår Energi takes the findings seriously. – Safe and proper execution of the Balder project is the company’s most important priority. We believe that the project is carried out with good planning and control, including deviation management, she says. Have you heard about the Goliat platform in the Barents Sea? It is another project that ended up costing far more than first thought. Johan Castberg But the Jotun ship is not the only oil and gas project that has become much more expensive than originally estimated. Operator Equinor thought the giant Johan Castberg project would cost NOK 60.3 billion when they submitted a plan for development and operation in 2018. In the state budget for 2025, the price has been adjusted upwards to NOK 86 billion. This is an increase of 43 per cent. Johan Castberg while it was moored at the shipyard at Stord. The ship is now in place in the Barents Sea. Photo: Olav Røli / news Here, among other things, poor welding work and a longer stay at the shipyard in Stord are cited as justifications. In addition to the corona pandemic and delayed delivery from the shipyard in Singapore. Johan Castberg is now anchored on the field in the Barents Sea and is scheduled to start production before the end of the year. In May, Johan Castberg was visited by Finance Minister Trygve Slagsvold Vedum. – Can also increase profitability The cost estimates in the plans for oil and gas projects have an uncertainty range of +/- 20 per cent. Balder Future and Johan Castberg thus blow up the scale by a good margin, but according to the government, most of the developments end up within the range of uncertainty. Cost gaps are not automatically negative for the profitability of a project, according to the Ministry of Energy. “If the increased investments generate higher income, it can contribute to greater value creation from the project”, writes the Ministry of Energy in its budget. Professor emeritus at BI School of Economics, Øystein Noreng, believes that the excesses at Balder Future are bad, but does not believe that the sum will amount to that much in the grand scheme of things. – There must be a revolution so that the project will not pay off in the long term, but Vår Energi will make a little less money, he says. In addition to the two mentioned projects, certain electrification projects have become quite a bit more expensive (see list): Published 07.10.2024, at 17.23
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NOK 28 billion in cost gaps – news Rogaland – Local news, TV and radio
