Norway's energy industry is facing another five years of subdued investments despite the recent uptick in international benchmark oil prices, according to a report by the Norwegian Oil and Gas Association.
Like all other global oil producers, Norway's oil and gas companies have been forced to substantially cut investments in new projects and this trend will continue in 2017, when investments are seen to fall to US$16.97 billion (143 billion kroner), down 7.14 percent from this year's US$18.26 billion (154 billion kroner).
For 2018, investments are expected to fall further to US$15.5 billion (131 billion kroner), with a slight improvement in 2019, to be followed by another three years of investment declines.
The 2019 improvement will be the result of the development of the huge Johan Sverdrup field in the North Sea - the biggest discovery in Norway's shelf in years. Commercial production at the field is scheduled for 2019, with initial production estimated at 315,000-380,000 bpd, to rise to 550,000-650,000 bpd at peak.
The NOGA allowed for an earlier improvement in investment should crude oil prices increase to US$70 a barrel, since its calculations were made on the basis of an average US$50 a barrel. Still, this improvement, at US$70 a barrel, would only come after 2018, and stand at around US$16.58 billion (140 billion kroner).
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Norway was among the countries that declined to take part in OPEC's latest efforts to prop up oil prices, although it did welcome the news about an agreement, not just within the group but also with 11 non-OPEC producers.
In a statement released this Saturday, Norway's oil and gas minister Tord Lien acknowledged the reduction in oil and gas spending over the last two years and noted that stability on the oil market is of vital importance for the global economy. The minister added that the country has "an open and constructive dialogue" with the group.
According to Bloomberg, this closer communication between global oil producers marks the end of intense competition and the start of closer cooperation.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More