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Sweden: Svenska to appeal Baltic Sea drilling decision


04 Jun 2009

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Svenska Petroleum the Swedish energy company will appeal a shock decision from the Swedish government that rejected its bid to drill wells in the Baltic Sea and revoked its exploration permit in promising blocks near the Polish maritime border. “We believe its commercially and morally wrong to allow the import of oil from around the world but not from your own country,” Svenska chief executive Fredrik Öhrn told Scandoil.com after the decision.

The prehistoric “reef systems” being explored by Svenska could hold up to 200 million barrels of oil, according to a report on the area and compatriot oil company Tethys in Scandinavian Oil-Gas Magazine in 2008. Öhrn said Svenska would appeal the decision because “The rejection does not answer the quesiton, “Are we allowed to drill exploration wells”, but only that they do not want production offshore Sweden.”

Öhrn suggested that the decision would likely never happen in oil rich Norway, where parliament has never turned down an oilfield project. “It comes down to Sweden having no experience in handling an oil industry,” he said, adding the decision was ostensibly, “Environmental and political.” Svenska had sought drilling permission in the same province where production has been ongoing since the 1970’s and 1980’s.

The decision by the Department of Industry will be appealed in the Consitutional Court in Stockholm, as it is believed a drilling decision for the Baltic must come from the Swedish Parliament, not a government ministry.

Öhrn said he was sympathetic toward the politics of curbing fossil fuel use and cutting emissions, but said the issue was one of “predictability”. The company had received signals of support from government officials “since the late 90’s and beyond. The rejection was a like a shot from the sky,” he recounted.

Swedish politics, focuses alternately on nuclear, renewables and coal-bed gas and is seen by some to have largely forced the scuttling of plans to build a gas pipeline from the North Sea to southern Sweden, Denmark and Poland, the so-called Skanled link. The same politics had once roused voters against a tiny, unmanned maintenance platform in the Baltic.

The decision to block Svenska and a Scandinavian pipeline to Europe bodes ill for the Russo-German gas pipeline Nord Stream, the success of which appears to hinge on Baltic nations not playing politics and the environment card, which they have. Subsea gas pipelines have impeccable environmental records.

Cynics, however, see a revival of drilling off Sweden and the Skanled pipeline once the Gazprom-E.ON pipeline is defeated and regional gas economics again favour local industry.

OPAB, a wholly owned subsidiary of Svenska, operates an offshore concession in Latvia (90%). The Dalders prospect, which stretches across from Sweden to Latvia, is believed to be one of the largest known undrilled prospects in the Baltic Sea. In 2007 an application for license extension and to drill the Dalders prospect in the Swedish economic zone was handed in to the Swedish Government, but was rejected. This means that OPAB will focus its activities on the Latvian side that holds considerable potential. 

In Latvia OPAB has a 90% interest in the E24 license, with the Latvian State holding the remaining 10% as carried interest in the exploration phase. In 2007 new 2D seismic data was acquired over Dalders and adjacent leads. Site-survey data was acquired covering future well locations.


 





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