Norway, western Europe’s biggest crude producer, vowed to keep a close watch on oil companies to ensure projects aren’t delayed as the industry prepares to cut investments for the first time in five years amid rising costs.
“We’ll be on guard if time-critical projects are affected,” Elnar Remi Holmen, an adviser to Petroleum and Energy Minister Tord Lien, said in an e-mail today. “We don’t want profitable opportunities to pass us by.”
Oil and gas companies operating in Norway expect to invest 174.5 billion kroner ($29.1 billion) next year, excluding shutdowns and removals, the nation’s statistics agency said on June 12, citing a quarterly survey of producers and explorers. That’s 16 percent lower than the corresponding estimate a year earlier and would be the first drop in spending since 2010.
State-controlled Statoil ASA (STL), which operates more than 70 percent of Norway’s oil and gas output, has cut its planned spending by 8 percent for the three years through 2016 and set up an efficiency program to lower costs. As the Stavanger-based company becomes more selective in investments, it’s reviewing, among other plans, a project to build a new platform at the North Sea’s Snorre field to extend production until 2040.
Norway’s government, seeking to maintain production after a 20 percent drop during the past decade, has already warned Statoil and its competitors to avoid “unacceptable delays.”
Authorities have encouraged the industry to deal with costs that have risen about 10 percent a year during that period. That’s led to estimated investments climbing to a record 231.7 billion kroner this year, a more than fourfold increase since 2002 as costs and activity increased, supported by new finds.
If lower investments next year also reflect efficiency measures, that would be “positive,” Holmen said. “It’s not very dramatic if investments for next year are somewhat reduced from today’s record level,” he said. “Investments will be at a high level going forward.”
Statistics Norway’s survey excludes spending on the Johan Sverdrup field, the country’s biggest oil discovery in decades, as a development plan isn’t scheduled to be filed until early next year.
“There’s therefore reason to believe that investments in 2015 will be somewhat higher than what Statistics Norway quantifies,” Holmen said.
To contact the reporter on this story: Mikael Holter in Oslo at email@example.com