France's Total sees potential in Denmark's upstream but wants to be "more competitive", it said as it announced 200 job cuts related to the redevelopment of Tyra, Denmark's biggest gas field.
Total inherited effective operatorship of Tyra through its $7.5 billion acquisition of Maersk Oil in March 2018, and the $3.2 billion redevelopment of Tyra was one of the French major's first key challenges.
The aging Tyra field is integral to Denmark's gas industry with more than 90% of the country's production -- which totaled around 4.5 Bcm in 2018 -- processed through the field's facilities.
"We see an interesting potential in Denmark, and we want to become more competitive to continue unlocking the potential of the increasingly challenging Danish subsurface in a sustainable manner," Patrick Gilly, managing director for Total's Danish North Sea operations, said in a statement.
"The decision to transform the organization reflects a temporary reduction of Total's Danish North Sea production due to the major redevelopment of the Tyra platforms," the company said.
Tyra will be shut in for redevelopment in November 2019, with production expected to recommence in July 2022 at a rate of around 60,000 boe/d, with two-thirds of the production expected to be gas and the rest oil.
That equates to an annual gas production rate of 2 Bcm, according to S&P Global Platts estimates, or around 40% of Denmark's gas demand of around 5 Bcm.
Total operates the field on behalf of the Danish Underground Consortium (DUC) in which it holds a 43.2% stake. Its partners are Shell (36.8%) and Danish state-owned Nordsofonden (20%).
Danish deal
Tyra had been threatened with permanent closure from 2018 due to poor economics, but in March 2017 Maersk and its DUC partners struck a deal with the Danish government on maintaining the operational life of the field through improved fiscal terms.
The partners took a final investment decision on the project in December 2017, allowing for the field to operate for an additional 25 years and boosting the prospect of new developments in the Danish sector of the North Sea.
Tyra's gas output has been falling since a peak of some 4 Bcm/year in the late 1990s.
Total's reorganization, announced Thursday, was, the company said, designed to make its Danish upstream simpler and more focused "with an aim to improve our competitiveness".
Around 1,500 people work in Total E&P Danmark, based in Esbjerg.
"Up to 200 employees and a number of contractors are expected to leave the organization as a result of the transformation," it said.
