Norway sees oil and gas activity picking up after the market turmoil and the health crisis earlier this year, the Norwegian Petroleum Directorate (NPD) said in its first-half activity report on Friday.
Norway is currently reducing its oil production by the end of the year because of the slump in oil prices in March and April. In a bid to support global efforts to prop up oil prices and ease the glut, Norway has decided it would cut its crude oil production by 250,000 bpd in June, and then maintain a 134,000-bpd lower rate of production for the rest of 2020. This is the first time Norway has joined oil production cuts since 2002. Then, Norway reduced its production rate by 150,000 bpd over the first half of the year, after oil fell below $20 a barrel following 9/11.
This year, after the coronavirus crisis and the plunge in oil prices, Norway passed temporary changes to its petroleum tax system, aiming to incentivize company investments and keep oil and gas drilling activity.
"There is still a basis for high, long-term value creation on the Norwegian shelf. The political decisions have helped stabilise an extraordinary and demanding situation. The temporary change will contribute to a continued high activity level, on par with what we forecasted before the pandemic and the drop in the oil price," NPD's Director General Ingrid Sølvberg said.
In June 2020, the month in which producers in Norway cut output by a combined 250,000 bpd, Norway's crude oil production dropped by 12 percent from May to 1.543 million bpd, the directorate said in preliminary estimates.
In the first half of 2020, Norway's oil production was higher than in the same period of 2019 - despite the COVID-19 crisis and the production cut in June - thanks the Johan Sverdrup oilfield starting full production this past spring.
"The field has proven to deliver beyond initial forecasts," NPD said.
Yet, after Johan Sverdrup and the planned Johan Castberg oilfield reach peak production in a couple of years, Norway's oil production is set for a natural decline after 2023 in the absence of significant new discoveries.
By Charles Kennedy for Oilprice.com
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