The Johan Sverdrup oil field, Norway’s biggest offshore project in decades, is benefiting from lower costs as the oil spending slump pressures oil service companies.

Investments in Sverdrup’s first phase will be lower than the 117 billion kroner ($14.3 billion) forecast in the project’s development plan presented in February, Karl Johnny Hersvik, chief executive officer of Det Norske Oljeselskap ASA, said in an interview in Oslo.

“It’s our expectation that capex will come down,” he said following an earnings presentation on Wednesday. Statoil ASA, the project’s operator, is “doing a good job on the procurement side and we’re seeing the results in the form of lower contract values than expected.”

A halving of oil prices in the second half of 2014 led oil companies to cut spending and costs, putting pressure on equipment and service suppliers to reduce their rates.

Statoil has already awarded contracts ranging from engineering work to platform construction for the Sverdrup field. They include a deal for drilling work to Odfjell Drilling Ltd. which reduced rig day rates by almost 50 percent compared to the unit’s current contract.

Det Norske’s Hersvik declined to provide a new estimate for Sverdrup investments, saying the operator should quantify savings. A spokesman for Statoil, Morten Eek, didn’t immediately answer a call seeking comment.

Other owners of Sverdrup include Lundin Petroleum AB and AP Moeller - Maersk A/S.

Source: www.bloomberg.com

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