Aker BP's major projects off Norway to cost more, fiscal budget shows

Aker BP's Yggdrasil and Valhall-Fenris Projects Face Rising Costs in Norway

Rising Costs and Project Updates for Aker BP's Major Developments

Overview of Cost Increases

OSLO, Oct 7 (Reuters) - The cost of Aker BP's major ongoing oil and gas development projects, Yggdrasil and Valhall-Fenris, has risen by 9.8% and 23%, respectively, from nominal estimates a year ago, data from the government's fiscal budget showed on Wednesday.

The increase was in line with projections made by Aker BP in July, a company spokesperson said.

Yggdrasil Project Details

Current and Previous Cost Estimates

The Yggdrasil project, the largest project under development off Norway since 2019, is now expected to cost 195 billion Norwegian crowns ($20.41 billion) up from a nominal estimate of 177.6 billion crowns one year ago.

Original Projections

Yggdrasil and Valhall-Fenris were originally projected to cost 120.8 billion crowns and 52.9 billion crowns, respectively, when they were approved by the government in 2023.

Valhall-Fenris Project Details

Cost Increases and Scope Expansion

The project to build a new processing platform for Aker BP's Valhall field, combined with the development of the nearby Fenris gas discovery, is now expected to cost 93.4 billion crowns, up from a previous estimate of 75.9 billion crowns.

Factors Behind Cost Increases

Construction and Resource Requirements

Aker BP flagged a cost rise in July citing updated estimates for construction of offshore installations and extra resources needed to meet the 2027 completion deadline.

Additional Resources and Wells

Estimates for Yggrasil project also increased due to the addition of new, recently discovered resources that expanded the work's scope, as well as due to additional wells at Valhall-Fenris, the fiscal budget showed.

Project Timeline and Financial Context

Production Start and Currency Information

Both projects were on track to start production next year, according to the government documents.

($1 = 9.5520 Norwegian crowns)

Reporting Credits

(Reporting by Nerijus Adomaitis, editing by Terje Solsvik)