A high level of activity in the Norwegian petroleum sector in recent years means that Norway has done much better than its trading partners in the wake of the financial crisis, writes Norsk Olje&Gas in its report. It also adds that capital investments are expected to drop after 2014.
The industry has made a positive contribution at a time when the market outlook for traditional Norwegian exports has become steadily weaker, the industry body says.
“With many people wanting to scale back activity on the Norwegian continental shelf [NCS], it’s worth noting that our petroleum industry will play an important role in the foreseeable future in securing sufficient energy for the world, continued substantial revenues for the government and Norwegian jobs,” says Bjørn Harald Martinsen, economics manager at the Norwegian Oil and Gas Association.
The outlook for the next few years is for a world economy where the rate of growth remains below historical levels. With a good finding rate, new development projects ahead and oil prices close to present levels, the basis nevertheless exists for maintaining a high level of activity on the NCS.
Given that background, the Norwegian Oil and Gas business trend report 2013 has been entitled Activity still high – in a still uncertain world.
At the end of the year capital spending for 2013 will have been around $35 billion, rising to $36 billion in 2014. The investments in the years 2015-2018 are expected to drop and remain flat at around $32 billion annually.
“After several years of investment growth on the Norwegian continental shelf, we approach peak. Activity levels in the coming years will also keep a consistently high level,“says Martinsen
Fifteen discoveries have been made on the NCS so far this year. Their overall resource potential is on a par with the result for 2012.
At the same time, a majority of the discoveries are small and will depend on a number of factors to become commercially viable for field development.
“After almost a decade of declining production from the NCS, we’re at another turning point where output has again begun to rise,” says Martinsen.
“However, we’re dependent on making new discoveries if this trend is to continue into the next decade. The resource base on the NCS remains substantial. At the same time, only about 40 per cent of the area where petroleum could be found has been opened.”
Norwegian Oil and Gas takes a very positive view of the government’s desire to maintain a high and predictable pace in awarding new acreage for petroleum operations in the time to come.
“A high and stable level of activity is the most important driver for further development of the oil and gas industry,” Martinsen notes.
“Oil and gas are an important element in all scenarios on future energy supply. In addition, our technology and expertise will play a key role in determining how the resources can best be recovered, both in deep water and in an environmentally acceptable manner.”
Cost trends and uncertain energy prices represent the industry’s most important challenges. The petroleum industry must concentrate attention on costs to be better equipped for lower energy prices.
This consideration is reinforced by changes to operating parameters of the kind seen during 2013, which help to encourage project reviews aimed at enhancing efficiency and cutting costs.
“Costs on the NCS increased sharply in the years before the financial crisis started, but this growth has recently moderated somewhat,” says Martinsen.
“Our estimates point to a continuation of this trend, and a moderate development in costs over the period up to 2018.”
Source: Norsk Olje&Gas , November 14, 2013