Norway urged explorers like Statoil and Lundin Petroleum to combine Barents Sea oil finds of as much as a billion barrels to make them profitable as output from the nation’s aging fields has slumped by half since 2000.

Lundin’s recent Alta discovery, with as much as 310 MMbbl of oil, is good news after Statoil this year again delayed the nearby Johan Castberg project over costs, Bente Nyland, director of the Norwegian Petroleum Directorate (NPD), told a conference Oct. 16.

“There’s a lot of oil here,” she said in an interview in Bergen. “It’s important for us that there are regional and coordinated solutions for several finds across license boundaries so that unit costs can be reduced and make developments in the Barents Sea more profitable.”

Norway, western Europe’s biggest producer, sees the Barents Sea as key to halting the decline from depleting fields in the North Sea. Yet optimism stoked by Statoil’s Castberg finds in 2011 and 2012 has been checked by the development’s repeated delays because of costs, taxes and resource uncertainties.

There are no fields in production in Norway’s Barents Sea, where projects are costlier because of a lack of infrastructure.

Eni SpA’s Goliat, discovered in 2000, has also been delayed several times and is headed for a 50 percent cost overrun when production is scheduled to start next year.

Statoil’s Castberg holds 400 MMbbl to 600 MMbbl of oil. In a 3 billion kroner ($450 million) drilling campaign the state-controlled producer described as disappointing, it found as much as 100 million barrels in nearby prospects. Lundin’s Alta has 85 MMbbl to 310 MMbbl. A year ago, Lundin also found Gohta nearby, with 60 MMbbl to 140 MMbbl.

Challenge Now

“The big challenge now is that there’s a very wide range on Gohta and Alta at the moment,” Nyland said. “If they come in on the upper end, we’ll have pretty significant resources in the area and it’ll be a hub whichever way you look at it.”

Nyland said the NPD hadn’t concluded whether a development solution with pipelines to a new onshore terminal—the initial choice that Statoil later shelved—would be most suitable. Statoil confirmed this week it was in talks with companies with interests in the area including Lundin on linking the finds.

“It’s very pleasing that they’ve found Alta,” Arne Sigve Nylund, Statoil’s head of development and production in Norway, said in an interview, adding it was too early to draw any conclusions. “It’s an exciting piece in that consideration.”