Ocean Viking drills for PetronordOn the trail of oil

Second licensing round

person by Trude Meland, Norwegian Petroleum Museum
The Ministry of Industry put 68 new blocks on offer in the North Sea on 21 May 1968.
— Leaflet | © Kartverket | Contains data under the Norwegian licence for Open Government data (NLOD) distributed by NPD
© Norsk Oljemuseum

These were primarily intended to supplement acreage in existing production licensing. The terms were largely the same as in the first round, but the ministry emphasised that companies which wished to benefit Norwegian industry and the Norwegian government would be given priority.

The Petronord group applied on 5 September 1968 for eight blocks in the following order of priority: 3/7, 25/1 (which proved to contain 60 per cent of Frigg), 30/6 (Oseberg), 15/3, 25/2 (East and South-East Frigg), 24/12, 2/11 (part of Valhall and Hod) and 15/6 (part of the Sleipner area).

Four of these blocks – 3/7, 25/1, 15/3 and 25/2 – were awarded on 25 May 1969 to the group, which also received the operatorship for 3/7 and 25/1. No other applicant secured a better outcome from their application.

The optimism which prevailed after the discovery of hydrocarbons in Cod had cooled somewhat in the wake of a number of dry wells. But drilling and new seismic surveys laid a better basis for assessing which acreage was interesting. Block 25/1 – the future Frigg field – was Petronord’s second priority in this round.

Under the Petronord agreement, Hydro was required to pay a minimum of 13.6 per cent of the exploration costs. Both it and the Norwegian government also had options which could be exercised in the event of a discovery. One option for Hydro was to increase its holding to 24.1 per cent, in which case the government would receive nine per cent. Alternatively, the company could expand its share to 34.6 per cent. The government stake would then be five per cent. In 1970, the TOM group[REMOVE]Fotnote: The Total Offshore Marine group, with Total as operator, comprising Total, Elf UK and Aquitaine, secured a licence for block 10/1 on the UKCS, where the British share of Frigg was discovered.

Although the terms for the second batch of licences were basically unchanged from the first round, these conditions changed along the way. Three weeks after the blocks were put on offer, the Organisation of Petroleum Exporting Countries (Opec) resolved on state participation in all new licences.

That August, Norway also adopted state participation with carried interest – in other words, free of risk before possible discoveries – as a requirement for new licences. The discovery of Cod had increased the value of the NCS and the Norwegian government initiated a new and more active oil policy.

Official attitudes shifted from leaving the job to foreigners to a desire to become involved.

Ocean Viking drills for PetronordOn the trail of oil
Published October 24, 2017   •   Updated June 2, 2020
© Norsk Oljemuseum
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