Photo: Illustration; Source: Equinor

Norway: Oil firms ramp up 2021 investment plans

A survey by the Norwegian statistics bureau SSB has revealed that oil and gas companies in Norway have boosted investment plans in recent months.

SSB stated in the survey published on Thursday that total investments in oil and gas activity in 2021 were estimated at NOK 166.3 billion ($18.4 billion) up from the 148.6 billion crowns forecast in August.

This is 12 per cent higher than estimated in the previous quarter, however, the estimate still indicates a significant decline from 2020. The estimate for 2020 is now NOK 182.5 billion ($20.2 billion).

This means that investment levels, impacting both the near-term growth of Norway’s economy as well as the country’s longer-term output of petroleum, are still expected to decline in 2021 but the drop will be smaller than anticipated three months ago.

SBB added that the investments in field development for 2021 were estimated at NOK 63.3 billion (around $7 billion). This is 27 per cent higher than the estimate given in the previous survey. The higher estimate is mainly due to significant higher reported cost estimates on some development projects.

These increased costs will probably not contribute to expanded production capacity more than initially planned. The increased estimate is also partly because some development activity initially planned for 2020 now is postponed to 2021.

Also, the increased estimate is due to the fact that some investments that were previously planned to be made in 2022 have now been accelerated to 2021.

SBB believes that some companies, including Equinor, could have accelerated several projects due to the Norwegian parliament granting tax incentives in June to spur investment and safeguard jobs amid the Covid-19 pandemic.

It is worth noting that, although the estimate for investments in pipeline transportation and oil and gas extraction has increased significantly, the stated accumulated amount for 2021 is still 9 per cent lower than the corresponding estimate for 2020.