Lundin Petroleum has sharply scaled back its ambitions for two oil discoveries in the Norwegian Arctic, in a setback to Norway’s hopes that the remote region might help support its oil industry.

The Swedish company said on Jan. 13 it had cut its resources estimate for the Alta oil discovery in the Barents Sea and no longer saw Alta and the nearby Gohta find as commercially viable for joint field development.

Instead, the two finds could in future be tied in as additional resources to another Barents Sea field, Equinor’s Johan Castberg, or to another potential discovery in the region, Lundin said.

But that would mean the fields being developed later than originally envisaged.

Lundin said the estimated size of the Alta find had been reduced based on high-resolution seismic data as well as data and analysis from a well drilled for extended testing in 2018.

The company in November 2019 said Alta and Gohta could hold between 115 million and 390 million barrels of oil equivalent in gross resources. It did not disclose its new estimate on Monday and did not immediately respond to requests for comment.

Lundin has a 40% stake in the Alta license, with Japan’s Idemitsu Petroleum and Germany's Wintershall Dea holding 30% each. At Gohta, Lundin has 40% and Aker BP 60%.

Lundin had previously planned to develop Alta and Gohta by using a standalone floating production and storage vessel. It will continue to explore in the area in the hope of finding more oil, the company said.

“Lundin Petroleum is drilling several large prospects in the Loppa High area in 2020, which if successful could change the dynamic of commercial options for this area,” the company said.

If a tie-in to Castberg is chosen, however, it could come in 2024-2026 at the earliest, Sparebank 1 Markets analyst Teodor Sveen-Nilsen said.

Lundin’s surprise decision to scrap plans for a standalone development at Alta contrasts with its previous optimism.

In its annual report for 2018, the company said extended production testing at Alta showed excellent reservoir productivity and “connectivity to a large volume of oil.”

While the reduction in expectations is a blow, investors are currently more focused on the ramp-up of the giant Johan Sverdrup oil field, which is estimated to hold about 80% of Lundin’s reserves.

At 11:00 GMT, Lundin shares were up 0.7% at 328.20 Swedish crowns.

In 2019, Lundin’s reserve replacement rate was 150%, the sixth consecutive year in which it added more resources to its portfolio than it produced, the company said separately.