Equinor: Oil & gas activities bode well for Norway with ‘strong’ ripple effects bringing billions of dollars

Norwegian state-owned energy giant Equinor has presented a new report, which shows that deliveries to exploration, operation, and modification of the firm’s operated fields and onshore plants in Norway exceeded NOK 93 billion or close to $8.7 billion in 2022, an increase of approximately 13% from the previous year. As the petroleum sector’s supply industry is Norway’s second largest industry in terms of turnover, after the oil and gas operators, it is considered to be of significant importance to the country’s economy.

The report, which was presented at Equinor’s autumn conference by the company’s Executive Vice President for Exploration and Production Norway (EPN) together with five trade unions – Industri Energi, SAFE, the Norwegian union of managers and executives (Lederne), NITO, and Tekna – was done by Bodø Science Park (KPB) through analyses of supplier lists and actual purchases of goods and services for Equinor-operated fields and onshore plants from Hammerfest LNG in the north to the Sleipner field in the south. This is the first time exploration activities are included, and the second time KPB has delivered this report.

Kjetil Hove, Executive Vice President for Exploration and Production Norway, commented: “Our activities create substantial national and local ripple effects. Equinor’s exploration, operations and maintenance activities generated 63,000 person-years of employment last year across the country. More than 1,700 Norwegian enterprises invoiced a total of NOK 87 billion in these segments. Norwegian suppliers accounting for more than 90% demonstrates the capacity, competence and competitiveness of the Norwegian oil and gas hub.”

Furthermore, Equinor bought goods and services from the Norwegian supplier industry for the operation of fields on the Norwegian Continental Shelf (NCS) for NOK 70.6 billion (almost $6.6 billion) in 2022. While exploration activities generated Norwegian supplies worth NOK 6.1 billion (nearly $568 million), supplies from the Norwegian supplier industry to onshore plants operated by Equinor amounted to NOK 10.2 billion (close to $950 million). On the other hand, international supplies to NCS fields and onshore plants totaled NOK 6.5 billion ($605.21 million).

Per Steinar Stamnes, Industri Energi on behalf of the five trade unions in Equinor, remarked: “This report demonstrates what the oil and gas industry means for Norwegian employment. Substantial value is created, and many people are involved in the work. The industry employs people, develops expertise and maintains activity across the country, and we want this to continue. We must keep exploring and producing oil and gas on the Norwegian Continental Shelf. At the same time, we will cut emissions and develop new value chains on the shoulders of the oil and gas industry.”

Statistics Norway outlines that the national turnover of the industry supplying the petroleum sector was NOK 293.8 billion (almost $27.4 billion) for 2022, an increase of 11% from the previous year. Much of this increase is believed to be due to a rise in prices, but also higher activity. Suppliers with direct deliveries to Equinor-operated fields, onshore plants, and exploration activities account for around 30% of this turnover.

Equinor underlines that its operations and exploration activity has “strong” ripple effects, with a total of 63,000 person-years of employment associated with this activity, either by the firm’s employment (9,800), jobs in Norwegian supplier companies (20,900), or as a result of sub-supplies and consumer effects (32,300).

Since the report is limited to ripple effects of exploration, operation and modification of Equinor-operated fields and onshore plants in Norway, the total societal ripple effects and value created by the company’s Norwegian activities are perceived to be even higher, as the value realized for owners and society when field products are sold, as well as tax payments, are not included.

This year Equinor stands to pay more than NOK 280 billion (nearly $26.11 billion) in tax to the Norwegian state. However, environmental and property taxes along with the ripple effects of field developments in Norway are excluded from the report.

In a bid to accelerate its decarbonization efforts, Equinor hired KCA Deutag’s Kenera business unit for a rig electrification project. The Norwegian energy giant also recently made a new gas discovery in the North Sea, using one of Shelf Drilling’s jack-up rigs. While the discovery is small in size, natural gas production is anticipated to start this year.