Arabian Oil Co. will acquire an interest in a Norwegian oil field slated to resume production this year, The Nikkei reported in its Wednesday morning edition.
The AOC Holdings Inc. (5017.TO) unit plans to take a 10% stake in the Yme oil field off the southwest coast of Norway. Through a subsidiary, it will buy the interest from the local arm of Canadian oil developer Talisman Energy Inc., which manages the field.
Crude oil production began at this site in the 1990s, but operations are suspended now. Production is expected to restart around the October-December quarter by using the latest technologies, such as injecting gas into the field to boost the pressure.
Initial output is estimated at 40,000 barrels a day, equivalent to about 1% of Japan's domestic demand, with daily yields of at least 20,000 to 30,000 barrels expected for several years to come. Arabian Oil will receive 10% of the output, in line with its interest.
Arabian Oil will also acquire 10% interests in two adjacent sites from Talisman, with exploration to take place to confirm reserves before production begins.
The firm's total investment, including the rights and costs for production equipment, is estimated at around Y10 billion.
Separately, Arabian Oil has filed an application in Iraq to participate in an auction for oil development rights there. The firm has worked with the Iraqi government in the past, such as on plans to upgrade oil shipment facilities and the training of technicians. Iraq boasts one of the largest oil reserves in the world.
Arabian Oil began operating a large oil field that straddles Kuwait and Saudi Arabia in 1961, but its contracts with both nations expired earlier this decade. Some 4 billion barrels were produced at this field.
The firm currently produces oil at an offshore field in Norway and another in the South China Sea. But production will drop sharply because its interest in the Chinese field is due to expire later this month. The firm is scrambling to develop new oil fields, with exploration projects now taking place in Egypt as well.