New drilling slated for pioneer area in the Barents Sea

The Norwegian subsidiary of Lundin Petroleum was granted a permit to conduct drilling operations well north of Johan Castberg. The license is for a wildcat well, one slated for an area not previously known to contain oil and natural gas reserves.

Statoil said it aims to make a final investment decision on Johan Castberg by the end of the year. Hailed as one of the largest in the company's portfolio that's yet to be developed, the field has estimated proven reserves of between 400 million and 600 million barrels of oil.

"The permit is contingent upon the operator securing the other permits and consents required by other authorities prior to commencing drilling activities," the Norwegian Petroleum Directorate said in a statement.

Lundin in its outline for the first quarter said total production was 82.6 million barrels of oil equivalent per day, at the upper end of its guidance. The company gained leverage in Norwegian waters last year when regional major Statoil spent $538 million to acquire an 11.9 percent stake in the company.

Apart from Russia, Norway is the lead oil and natural gas exporter to the European market, designating nearly all of its offshore production for European Union demand.

New data from the NPD for the eastern and northern parts of the Barents Sea, areas previously a source of dispute with Russia, led to upward revisions of the reserve estimate by up to 65 percent.