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Oil and gas companies operating offshore Norway are expected to increase their investments in 2020 by 3.8 percent to US$21.4 billion (194.6 billion Norwegian crowns), mostly due to higher cost estimates for some projects, the Norwegian Oil and Gas Association said on Thursday.
Going forward, not one project on the Norwegian Continental Shelf (NCS) can come close to the giant Johan Sverdrup, the oil lobby in Norway said in its report.
Johan Sverdrup, the North Sea giant as its operator Equinor has dubbed it, is already producing 350,000 bpd, and it will produce 660,000 bpd—or around a third of Norway’s crude oil production—when the second development phase currently under construction comes online.
With expected resources of 2.7 billion barrels of oil equivalent, Johan Sverdrup is one of the largest discoveries on the Norwegian Continental Shelf (NCS) ever made and one of the largest industrial projects in Norway for the next fifty years, according to Equinor.
Johan Sverdrup will boost Norwegian oil production through the mid-2020s, but the country would need more and larger oil discoveries soon in order to stave off another drop after the mid-2020s.
Johan Sverdrup and other small projects and tiebacks are set to boost spending on the Norwegian shelf next year, but then in 2021, investments are set to slump by 12.3 percent year on year, before leveling off in 2022 and 2023.
In absolute numbers, the oil association raised its spending forecasts for 2020-2024 from the previous projections from last year. Yet, after 2020, only 2023 will see slight annual growth in investments, while spending levels are seen down on a yearly basis in 2021, 2022, and 2024.
The association, which includes the largest oil firms and oilfield service providers operating offshore Norway, is optimistic that more projects currently at an early planning stage could be approved, thus boosting investment through 2024.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.