The oil and gas industry in Norway is set for a significant boost in investment, with total expenditures for 2024 estimated at NOK 253 billion, reflecting a NOK 12.4 billion increase from the previous quarter.
This figure is 18.4% higher than the corresponding estimate for 2023, driven by increased activity in field development, pipeline transportation, and exploration, according to SSB.
Key drivers of growth in 2024
The surge in investment stems from higher activity in several areas.
Field development projects initiated in late 2022 are now in their peak activity phase, contributing significantly to the rise.
Exploration efforts have also rebounded, with the number of wells drilled in 2024 already surpassing the total for 2023.
Additionally, investments in shutdown and removal activities, as well as pipeline transportation, have grown sharply, with the latter seeing a 171% increase from the previous year’s estimate.
2025 promises further growth
Projections for 2025 indicate an 8.9% rise in investments compared to the 2024 estimate. Growth is expected to be fueled by increases in activities related to operational fields, pipeline transportation, and onshore developments.
While no new development projects are included in the current estimates, plans for new developments are expected to be submitted, potentially boosting the 2025 figures even further.
Seasonal trends and final quarter impact
Historically, the fourth quarter sees the highest level of investment activity.
For 2024, an estimated NOK 74 billion in investments is expected during this period, representing a 16.1% growth from the third quarter.
However, some of these investments may be postponed to 2025, continuing the upward trajectory into the next year.
Challenges in realizing estimates
While investment growth appears strong, inflationary pressures, with a 7% annual increase in investment prices, mean that growth in real terms may be more modest.
Additionally, delays in planned expenditures could shift some expected investments to future years.
Facts about Norway oil and gas reserves
Proven reserves: Norway's proven oil reserves totaled 7 billion barrels at the end of 2023.
Oil production trends: Norway produced 2.0 million barrels per day (b/d) in 2023, with production expected to rise through 2025, despite a decline from its peak of 3.4 million b/d in 2001.
Offshore production: Most oil and natural gas production in 2023 came from offshore areas: 88% in the North Sea, 11% in the Norwegian Sea, and 1% in the Barents Sea.
Crude oil grades: Norway produces various light to medium crude oil grades, including notable blends like Ekofisk, Oseberg, Johan Sverdrup, Gullfaks, Statfjord, Troll, and Granne.
Equinor's dominance: Equinor, a 67% state-owned energy company, produces 70% of Norway’s oil and natural gas and operates globally, with the majority of its oil production occurring in Norway.
Johan Sverdrup Field: This field was Norway’s top producer in 2023, accounting for 40% of the country’s crude oil production at 712,000 b/d. It holds 2.7 billion barrels of reserves and is nearing its production plateau.
Mongstad Refinery: Norway’s only oil refinery, Mongstad, has a capacity of 203,000 b/d. It refines four times more liquid fuels than Norway’s annual consumption and serves as a key export hub.
Natural gas liquids (NGLs): NGL production peaked at 351,000 b/d in 2017 and was 204,000 b/d in 2023. Key producing fields include Troll (23,000 b/d) and Åsgard (21,000 b/d).
Kårstø processing facility: The largest NGL processing center in Europe, Kårstø separates liquid products and dry gas from natural gas. It handles exports of propane, butanes, and natural gasoline worldwide and supplies ethane to petrochemical users in the North Sea basin.
Oil consumption stability: Norway’s oil consumption has remained stable at approximately 220,000 b/d since 2020, with 75% used in transportation and 16% in non-fuel-related industries like manufacturing and construction, with information from EIA.
Comments