BAKU, Azerbaijan, April 5. Flows from Johan Sverdrup (JS) oil field off the coast of Norway may change from Asia towards Europe in the case of a complete shut-down of imports from Russia, Trend reports with reference to Oxford Institute of Energy Studies (OIES).
The Johan Sverdrup began production in October 2019. Within a year it was producing over 500 kb/d.
“Phase two development to be completed by end 2022 will see production increase to over 700 kb/d—similar to the volumes of Midland WTI currently being imported into Europe. Historically, most of JS has been sold on delivered basis to Asia. This flow may change with curtailment of Russian crude oil and redirection of Urals towards Asia as JS could become substitute to Urals,” reads the latest report released by OIES.
However, the Institute analysts note that the JS quality is significantly different from the rest of the ‘Brent basket’ of crudes.
“It is far heavier and has a higher sulphur content. It is possible to devise a quality premium (QP) (in this case a discount) like those used for the other grades in the Brent basket and/or a sulphur de-escalator similar to the one used for Forties. But there is also the issue of concentration. Equinor is by far the largest equity holder and the dominant lifter. Benchmark integrity and transparency require a diluted level of concentration with multiple participants. Equinor’s ownership in JS along with existing positions in Troll, Oseberg and Ekofisk could possibly restrict trade. Thus, the combination of quality factors and concentration of ownership seems to have contributed to the industry’s preference for inclusion of WTI Midland rather than JS as a new grade in the ‘Brent basket’,” said OIES.
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