UK and Norway sign oil development deal

Britain and Norway signed a treaty today on developing oil fields that straddle their North Sea boundary in hopes of eventually boosting supplies to help meet world thirst for oil.

Demand has pushed oil prices to record levels, so high that Norwegian oil minister Thorhild Widvey said she now worries that the cost could be harmful to the world economy.

“We are concerned that prices go too high,” Widvey said at the treaty signing in Oslo. “I hope the price will go down a little.”

The new treaty, which was finalised in February, was signed by Widvey and British energy minister Mike O’Brien in hopes of producing more oil, especially from smaller fields in the border zone.

Experts said the deal could unlock oil worth more than £2 billion.

Neither Norway nor Britain is a member of the Organisation of Petroleum Exporting Countries, but Mr O’Brien said he and others were talking with the cartel about what to do about oil prices.

Widvey said the new Norwegian-UK treaty is “a very important agreement concerning future oil and gas developments in the North Sea”.

Norway, the world’s third-largest oil exporter after Saudi Arabia and Russia, is already producing at full capacity and expects its oil production to decline as major fields age.

It has been stressing development of smaller fields as a way to maintain capacity, currently about 3.2 million barrels of oil per day.

Britain also produces oil and natural gas from offshore fields. Some fields already in production, such as Statfjord, Frigg and Murchison, and others that could be developed are beneath waters claimed by both nations.

The new framework treaty includes projects not already outlined in other agreements, and cover such things as building joint oil and natural gas pipelines, jointly developing median-line fields and using infrastructure on one side of the border to develop resources in the other country’s waters.

Widvey said she and Mr O’Brien expect to approve two joint cross-border projects, the smaller Enoch and Blane fields, within the next few months.

“This is encouraging since both fields have remained undeveloped for years. Now, the treaty has facilitated these projects,” she said.

The countries also hope the treaty will stimulate other small field developments, potentially increasing future supplies, although the projects could still take years to complete.

Many of those fields are in the border areas between the countries, and experts said the treaty could unlock roughly £2bn (€2.9bn) worth of future production.