Norway chops oil production forecast for 2019

An oil drilling platform sits on board the world's largest construction vessel, the Pioneering Spirit, in the Bomla fjord near Leirvik, ahead of its transportation to the Johan Sverdrup oil field, Norway, on Friday, June 1, 2018. Equinor ASA has reduced the break-even price to below $20 a barrel in its flagship Johan Sverdrup oil project in the North Sea. Photographer: Carina Johansen/Bloomberg
An oil drilling platform sits on board the world's largest construction vessel, the Pioneering Spirit, in the Bomla fjord near Leirvik, ahead of its transportation to the Johan Sverdrup oil field, Norway, on Friday, June 1, 2018. Equinor ASA has reduced the break-even price to below $20 a barrel in its flagship Johan Sverdrup oil project in the North Sea. Photographer: Carina Johansen/Bloomberg

Norway’s oil and gas regulator reduced its forecast for production this year, as crude output is set to be lower than previously expected.

Oil and gas output will be 222.3 million cubic meters of oil equivalent, down from 226.7 million in 2018. That’s also down from an earlier forecast of 229.6 million, mainly due to an almost 6 percent reduction in the estimate for crude production while expected gas sales were cut by less than 2 percent.

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NPD says output has been affected by new developments becoming more complex than anticipated and that fewer than expected wells have been drilled. The NPD expects oil companies to drill 53 exploration wells offshore Norway in 2019, unchanged from last year, as the industry recovers from a recent downturn. Investments in the offshore industry to rise 13 percent in 2019 to more than 140 billion kroner, excluding exploration. The forecasts confirm that Norway’s oil industry is in full recovery mode, thanks to higher commodity prices but also drastic cost cuts that have made more projects profitable, even considering the recent relapse in crude prices. Still, the NPD again warned that the industry faces a slowdown toward the middle of the next decade due to a lack of new, big projects.

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In the longer term, the NPD repeated its expectation that total output will rise after 2019 and come close to a new peak in 2023. It also raised production estimates for the last years of its long-term outlook until 2030. Norway is western Europe’s biggest oil and gas producer The NPD publishes forecasts once a year in January. This year’s report comes three days after the industry lobby, the Norwegian Oil and Gas Association, presented its investment forecasts and sounded a warning that uncertainty surrounding framework conditions could have a significant impact on future spending.

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