Oil and gas companies operating in Norway, western Europe’s largest producer, maintained estimates for record spending this year even as they become more selective about projects amid rising costs and lower profitability.
Spending is forecast to reach 223.7 billion kroner ($37.3 billion) this year, little changed from a December estimate of 223.3 billion kroner, Statistics Norway said in a statement today, citing a quarterly survey of producers and explorers. That’s up 7 percent from last year’s 209.1 billion kroner.
Even though spending is estimated to climb to a record in 2014, the statistics bureau’s forecast represents a slowdown in investment growth from last year, when the rate was more than 20 percent. Companies including Statoil ASA, Norway’s largest energy producer, have cut spending plans for the coming years in a bid to boost returns as costs rise and oil prices stagnate.
A slowdown in spending will hurt efforts to boost recovery at producing fields in particular, the Norwegian Petroleum Directorate and state-owned Petoro AS have warned. While spending on new field developments is expected to reach 80.4 billion kroner in 2014, 1 billion kroner more than estimated three months ago, the forecast for spending at producing fields was lowered by almost 4 billion kroner to 98.4 billion kroner, Statistics Norway said.
Oil-industry investments may fall as soon as next year, the Norwegian Oil and Gas Association said in November. The NPD, which oversees the industry, expects spending to climb to a record 214 billion kroner next year from 210 billion kroner this year before falling in 2016, it said in January.
Statoil, which operates more than 70 percent of Norway’s oil and gas production, has faced criticism from authorities for its plans to reduce spending growth. Petroleum and Energy Minister Tord Lien said last month that Norway will seek to attract more, large companies to compete with Statoil, in which the government owns a 67 percent stake.