The Norwegian oil sector is set for a promising three to four years but major discoveries must be made to prolong activity after that, the head of the agency overseeing the country’s oil and gas resources told Reuters.
Norway’s leading industry has been on the mend for the past two years after a 2014-2016 downturn during which oil companies slashed investments, projects and jobs.
“We are still in the upturn phase (of the cycle). We have many field developments ongoing. We believe the next three-four years are looking very promising,” Bente Nyland said in an interview on the margins of an energy conference.
“For the rest of the year and the next, we expect between five and 10 new development plans (to be submitted to authorities),” she said, adding that some 40-45 wells would likely be drilled in 2018 compared with around 30 last year.
“Then we will begin to eat into what possibilities we have left. We need to sow more. We hope for a big find that can continue activity,” she added.
Norway’s Equinor submitted on Monday the development plan for the second phase of its Johan Sverdrup asset, which could be the last of the giant North Sea oilfields.
“It is clear that there aren’t a lot of big developments after that, and that is worrying,” Nyland said.
If no big finds are made, Norway must work on making the smaller finds profitable. “We have some 70 finds we think we can develop. Exploration activity has increased so we hope discoveries can be made in the coming years,” she said.
Meanwhile, oil firms are conscious of not letting costs inflate at the rate they did between 2011 and 2013, which helped precipitate the oil-sector downturn of 2014-2016.
“Our impression so far is that the companies are focused and conscious of costs,” she said.
Norway’s 2018 oil production is so far coming below the Norwegian Petroleum Directorate’s forecasts due to a couple of unplanned offshore shutdowns, though Nyland cautioned the situation may turn before the end of the year.
“Gas production is maintaining itself (against our forecast). Oil production looks somewhat lower (than expected) but the year is not over,” she said.
“For 2019, the early prognosis we put in the (Norwegian) national budget shows an upswing in petroleum production, mostly due to gas, which represents nearly half of output,” she said.
Oil production should increase somewhat due to developments coming online. “Still, it won’t be a massive rise, it is an uptick,” Nyland added.
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Headline crude prices for the week beginning 16 September 2019 – Brent: US$69/b; WTI: US$63/b
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