Oil and gas operators in Norway are expanding their exploration budgets by more than expected, Norwegian Petroleum Directorate (NPD) chief Bente Nyland said on May 29.
Companies including Equinor – formerly Statoil – are now expected to drill about 45 exploration and appraisal wells during 2018. This is up from an earlier forecast of around 35 and represents a more than 32% increase on the 34 completed in 2017.
The NPD may therefore have to revise upwards its forecasts for the oil industry’s overall investments in Norway for this year, Nyland said, adding that spending is anticipated to grow further in 2019 and 2020 as cost inflation returns to the industry.
Norwegian Oil Minister Terje Soeviknes said separately that the winners of new exploration acreage in the country’s 24th offshore licensing round would probably be revealed in June. This could trigger a further surge in investment.
He cautioned, however, that companies must continue their focus on cost containment. "We must at all cost avoid leaning back because things are going a bit better, and end up going into a new cost spiral," he said.
His and Nyland’s comments follow the results of a survey by the Norwegian statistics authority, released earlier in May, which indicated that oil companies intended to expand their expenditure on new exploration, though they would invest less in mature fields.
The survey indicated for example that the industry aimed to spend 33.3 billion kroner (US$4 billion) on new exploration activities in 2019, up from 25 billion kroner (US$3 billion) in 2018.
For the whole of 2018, however, investment has been cut by around 2.1% since February and is now anticipated to come in at around 156.5 billion kroner (US$19 billion) – up just 1.4% on 2017.
The figures are slightly worse than expected, said Nordea Markets’ chief economist, Kjetil Olsen, though he said his "interpretation [was] that the underlying pace remains good." Strengthening oil prices are also likely to trigger a further rise in investment.
That said, the statistics office survey’s findings suggest the latest oil licensing round in mature parts of the Norwegian Continental Shelf (NCS) – launched earlier this month, with bidding open until September 4, 2018 – could prove disappointing.