Equinor and Var Energi will soon start production of Johan Castberg, which is a 34.7oAPI crude with 0.16wt% sulphur. Compared with Johan Sverdrup, it is a much lighter and sweeter crude. It is also more paraffinic, which is a good feature for FCC refineries. Based on API gravity and Sulphur, one might think that Johan Castberg has lower value than the other crudes in the Brent complex. However, based on the refining margin scenario that has prevailed between August 2024 and February 2025, we estimate that the refining value of Johan Castberg delivered to Rotterdam would have been approximately $1.75/bbl higher than WTI, which sets the price of Brent quite frequently. This is mostly attributable to higher yield of middle distillate.
Equinor and Var Energi will soon start production of Johan Castberg, a field located in the Barents Sea. The field has estimated recoverable reserves of 450-650 million barrels. At peak, it may produce 220,000 barrels per dayi. Johan Castberg will add to the recent development of Johan Sverdrup and will contribute to sustain Norwegian crude oil production into the future.
The most recent crude assay published by Equinor shows that Johan Castberg is a 34.7oAPI crude with 0.16wt% sulphurii. A comparison with Johan Sverdrupiii shows that similarities are limited to three factors. Both crudes have a very high yield of vacuum gasoil, which is considered an attractive feature for European refineries, especially at times of low margins when they seek to fill cracking capacity at reduced crude throughput. Both crudes have a high ratio of middle distillates to naphtha, which is also a positive feature for the European market as middle distillates are the highest value type of products. The third and final similarity is the use of the word Johan in the name, which is arguably irrelevant. In many other fundamental respects, these are very different crudes.
Johan Sverdrup has a high yield of vacuum residue, which can be used to fill up residue conversion units. This makes it a lower sulphur substitute of Russian Urals. By contrast Johan Castberg has a content of vacuum residue that is lower than WTI, which is the lightest crude of the Brent complex.
Johan Castberg is a more paraffinic crude, whereas Johan Sverdrup has an intermediate chemical nature and some naphthenic acidity (TAN = 0.32). The difference in chemical nature is evident in the higher kerosene smoke point of Johan Castberg, the higher cetane number, the higher K-factor and the lower densities of the gasoil fractions. These are all indicators that these fractions have a higher content of hydrogen. However, Johan Castberg has a more naphthenic heavy naphtha, which is good for naphtha reforming and production of paraxylene, but bad for refineries integrated with steam crackers.
A question that is asked about North Sea crudes is whether they may fit in the Brent complex, so how does Johan Castberg compare with WTI and Forties, which set the Brent price most of the time?
Johan Castberg is heavier than both WTI and Forties, and has a slightly higher content of sulphur than WTI. On this basis, one might think that Johan Castberg has lower value than WTI. However, the lower API gravity of Johan Castberg is in large part attributable to the much lower yield of naphtha, which is a low value product.
Both Johan Castberg and WTI produce vacuum residues that have a very low content of sulphur, so both crudes are suitable for production of VLSFO also at cracking refineries. Both crudes produce atmospheric residues with low content of contaminant, e.g. low Conradson Carbon and metals. This means that the atmospheric residue can be cracked in FCCs without needing to be hydrotreated. All of this makes Johan Castberg a good substitute of WTI and the other crudes in the Brent complex.
The table below compares the refining yields of Johan Castberg with the other crudes. The yields are for a simple FCC refinery. Johan Castberg has the highest yield of light products, the highest volumetric expansion (because of the high yield of VGO fed to the FCC) and the highest ratio between middle distillates and gasoline. Johan Castberg, WTI and Ekofisk all produce fuel oils that can be part of a VLSFO pool, so their valuations could benefit from high VLSFO-HSFO differentials.
A calculation of the refining value of these crudes with historical product prices between 2021 and 2025 shows that the value of Johan Castberg would have been higher than WTI by $3.00-3.50/bbl. However, this comparison is unfair because Johan Castberg uses an amount of FCC capacity that is 28 vol% of crude distillation capacity vs 20 vol% for WTI. For a refinery that plans its operations against the maximum FCC capacity, this carries an opportunity cost that must be considered. When accounting for this factor, the valuation of the two crudes is much closer.
The period between March 2022 and July 2024 has been unusual for having very high hydroskimming margins. For low sulphur crudes, hydroskimming margins were supported also by strong VLSFO prices relative to HSFO. In that period, most refineries would have operated at maximum crude distillation capacity and would have also used any incremental hydroskimming capacity they might have. When valued with incremental hydroskimming yields, Johan Castberg would have been worth $2.50-$3.00/bbl more than WTI. This is mostly attributable to the higher yield of gasoil at a time of very high gasoil margins.
Since August, margins have settled at more normal levels, so a valuation based on cracking yields could be more appropriate. If valued with FCC yields, but at constant FCC capacity, Johan Castberg would have been worth $1.50-2.00/bbl more than WTI. If valued with incremental hydroskimming yields, the result would have been quite similar. The main factor behind the higher value of Johan Castberg is the higher yield of middle distillate. This should make it a higher value crude in Europe in most price scenarios.
The estimate of refining values that have been discussed above capture carbon costs at prevailing prices for each month. Johan Castberg has a higher carbon intensity because it uses more cracking capacity. However, it has also a higher yield of light products. Thus, processing Johan Castberg emits 28.7kgCO2 per barrel of light transportation fuels produced, versus an average of 26.7kgCO2 per bbl for the other four crudes that are part of the Brent complex.
© Midhurst Downstream, 2025
i https://www.equinor.com/news/johan-castberg-anchored-on-the-field (accessed on 7 March 2025)
ii Crude assay published on the Equinor website and dated October 2024
iii Crude assay published on the Equinor website and dated April 2021