Norway’s oil lobby raised its forecast for investments in the country’s petroleum industry as cost cuts during a three-year downturn made projects more profitable and able to withstand even the recent slump in crude prices.
Oil and gas companies operating in Norway will invest 184.5 billion kroner ($21.5 billion) in 2019, the Norwegian Oil and Gas Association said in annual forecasts on Monday. That’s a 16 percent jump from 2018, and compares to a prediction of 153 billion kroner made in December 2017.
The group raised spending forecasts for each years through 2022. It expects investments to peak this year, remain little changed in 2020, and then drop to 141.5 billion kroner in 2023. The lobby warned that these forecasts depend on framework conditions remaining stable for the industry, following public debate surrounding issues like petroleum taxes. Investments in Norway’s oil and gas industry rose for the first time in four years in 2018, thanks to higher commodity prices and drastic cost reductions. Despite benchmark Brent crude dipping from $85 a barrel to about $58 in the past three months, prices remain above the lows of less than $30 in 2016. Crucially, they also exceed the price needed by recent projects offshore Norway to break even.
Norway’s statistics office in November boosted its oil-spending estimate for 2019 to 175 billion kroner, based on its latest quarterly survey of oil companies. The Norwegian Petroleum Directorate, the industry regulator, is publishing its annual production, investment and exploration prognoses on Thursday. The Norwegian Oil and Gas Association’s members include oil companies such as state-controlled national champion Equinor ASA, Exxon Mobil Corp. and Royal Dutch Shell Plc, in addition to industry suppliers from Schlumberger Ltd to Aker Solutions ASA.