Norway said that it would reduce 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, the Ministry of Petroleum and Energy said in a statement.
"We are currently facing an unprecedented situation in the oil market. Both producers and consumers benefit from a stable market," Petroleum Minister Tina Bru said. "We have previously stated that we will consider a cut in Norwegian production if several big producing countries implement significant cuts. The decision by the Norwegian Government to reduce Norwegian oil production has been made on an independent basis and with Norwegian interests at heart."
The baseline for the cuts will be 1.86 million bpd, which, according to the Norwegian Petroleum Directorate, is substantially higher than the average production rate for March, which was 1.68 million bpd. The difference means that the actual June cut will be about 70,000 bpd, based on March levels, according to Oilprice calculations.
Based on the NPD production reports, Norway's oil production rate has not exceeded 1.8 million barrels for at least four years.
In addition to the cuts, however, the minister said that Norwegian oil companies would delay the startup of several new oil projects until next year, likely in hopes the price situation will have resolved itself by then.
"The cut will include oil fields on the Norwegian Continental Shelf and be fairly distributed between the fields and thereby between companies," Bru said. "It will imply a limitation of production for those oil companies with ownership shares in the relevant oil fields. Gas fields are exempt."
This would be 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 the 9/11 terrorist attacks.
By Irina Slav for Oilprice.com
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