Bloomberg: Norway Sees Oil Production Falling 9.7% This Year

Bloomberg
Norway Sees Oil Production Falling 9.7% This Year (Update2)

By Marianne Stigset

Jan. 8 (Bloomberg) -- Oil production on the Norwegian continental shelf may fall 9.7 percent this year, declining for a ninth year, the country’s Petroleum Directorate said.

Crude output will fall to about 110.8 million standard cubic meters, or 1.9 million barrels a day, in 2009, from about 122.7 million standard cubic meters, or 2.11 million barrels a day, last year, the directorate said in a report.

Bloomberg
Norway Sees Oil Production Falling 9.7% This Year (Update2)

By Marianne Stigset

Jan. 8 (Bloomberg) -- Oil production on the Norwegian continental shelf may fall 9.7 percent this year, declining for a ninth year, the country’s Petroleum Directorate said.

Crude output will fall to about 110.8 million standard cubic meters, or 1.9 million barrels a day, in 2009, from about 122.7 million standard cubic meters, or 2.11 million barrels a day, last year, the directorate said in a report. Production will drop to 94.4 million standard cubic meters in 2013.

“Between 2009 and 2013 we expect significantly reduced oil production,” Bente Nyland, head of the directorate, said at a press conference in Stavanger. “We expect cost growth to level off or decline next year.”

Norway, the world’s fifth-largest oil exporter and third- biggest natural-gas supplier, pumped its first barrel of oil more than three decades ago in the North Sea. The country is boosting production of natural gas and opening more of its unexplored northern waters to drilling to counter a decline in oil output at maturing fields.

Exploration Record

Total petroleum production is expected to fall to 236 million cubic meters of marketable oil equivalents this year and to about 228 million in 2013, the directorate estimates. Petroleum production was 242.2 million cubic meters last year, down 8 percent from a record in 2004.

A record 56 exploration wells were spudded on the Norwegian continental shelf in 2008, up from 32 in 2007, the directorate said. With almost every other well yielding a discovery, this resulted in a record 25 discoveries, of which four were in the Barents Sea, nine in the Norwegian Sea and 12 in the North Sea, the agency said.

Natural gas output is forecast to rise to 102.9 billion cubic meters this year and peak at 112 billion cubic meters in 2011, the directorate said. Production was 99.3 billion cubic meters last year, the agency estimates.

Ten new development plans have been submitted to the authorities for approval in 2009, including the Gudrun field, operated by StatoilHydro ASA, and Eni SpA’s Goliat field.

Challenge

Norway had an estimated 13 billion standard cubic meters of oil equivalents in petroleum resources at the end of 2008, following an annual gross increase of 39 million cubic meters, the directorate said.

Norway’s oil and gas industry invested more than 130 billion kroner in 2008 amid record oil prices and rising costs on the Norwegian continental shelf, the directorate said. There’s “uncertainty” about what effect the drop in oil prices and the global slowdown will have on investments after 2009, the agency said.

Norwegian fields “have a robust economy at $50 to $70 a barrel of oil,” Nyland said in an interview. “Should prices fall below $50, without production costs going down, projects may be postponed.”

Crude has plunged more than 70 percent from a record $147.27 a barrel in July as the global recession erodes demand.

Nyland said she expected to see consolidation in the Norwegian oil industry in 2009 because of tightening credit and the time-lag in the decline of oil-services costs. This could impact Norway’s 20th licensing round, the production licenses for which will be awarded in the spring.

“We do believe there will be consequences from the change in profitability-level on the continental shelf,” Nyland said. “We’ll see a consolidation in the number of actors. Some companies may withdraw their application.”

To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net
Last Updated: January 8, 2009 06:23 EST