Peak Oil is You

Donate Bitcoins ;-) or Paypal :-)

Page added on August 26, 2014

Bookmark and Share

Norway to Cut Oil-Production Forecasts as Costs Delay Projects


Norway, western Europe’s biggest oil producer, will probably cut its long-term forecast for crude production as companies reduce spending to counter rising costs and improve shareholder returns.

As investments in Norway’s oil industry fall after a peak this year, production beyond 2015 will be lower than expected, according to Bente Nyland, head of the Norwegian Petroleum Directorate. The estimate cuts are expected to be reflected in the NPD’s annual prognosis scheduled to be published in January.

“There might be a certain decrease,” she said in an interview in Stavanger today. “It’s capital discipline, it’s costs.”

Norway is struggling to sustain oil production that’s more than halved since a peak in 2000 as producers including Statoil ASA (STL) scale back spending plans. The NPD in its latest prognosis in January predicted oil production would rise this year and remain stable through 2018. Still, the forecasts were lower than those made at the beginning of 2013.

Oil companies operating in Norway could reduce investments by more than 20 percent next year as they fight costs that have cut margins amid stagnating oil prices, Statistics Norway said in June. Statoil, which operates more than 70 percent of the country’s offshore platforms, in February said it will cut planned investments during the next three years by 8 percent at the same time as abandoning earlier goals for production growth.

Government Warning

“There’s a large gap between what’s profitable for society and what’s profitable for companies,” Nyland said today. “That might be the biggest obstacle.”

Norway’s government has warned companies not to let lower spending impact planned projects and particularly time-critical measures aimed at increasing recovery from existing fields. Petroleum and Energy Minister Tord Lien today reiterated that warning in a speech at the ONS conference in Stavanger, pledging in return to keep framework conditions stable and predictable.

“Producing easy oil only is not in accordance with good resource management and the license to operate,” the minister said. “Cost cutting and capital discipline are important rules in order to produce more resources. However, it should not lead to leaving economic resources in the ground.”

Oil companies have complained that a tax increase last year by Norway’s previous government has made projects less profitable. Together with a move by Parliament this year to force operators to power four offshore fields from land, the tax increase has introduced more political risk in Norway, the Norwegian Oil and Gas Association, a lobby group, has said.


7 Comments on "Norway to Cut Oil-Production Forecasts as Costs Delay Projects"

  1. Nony on Tue, 26th Aug 2014 5:59 pm 

    Raise taxes, lower production. Surprise, surprise.

  2. Makati1 on Tue, 26th Aug 2014 9:18 pm 

    “_________ to Cut Oil-Production Forecasts as Costs Delay Projects”

    Future headlines. Fill in the appropriate country. It will be the collapsing economy that ends oil, not the lack of oil to recover.

  3. trickydick on Tue, 26th Aug 2014 10:23 pm 

    It wasn’t until I started reading the forum here that I became familiar with ‘cap-ex’. Watching the various oil companies’ earnings shrink because of these rising costs tells us that the peak is probably in our rear view mirror. Costs are rising and the barrel count is steady.

  4. forbin on Wed, 27th Aug 2014 4:14 am 

    “… Norway is struggling to sustain oil production that’s more than halved since a peak in 2000 ….”

    In one of world’s best managed oil industries .

    now repeat after me
    , there is no peak , there is no peak , there is no peak……..darn it concentrate !!

    Still they have banked all that wealth in shares and stocks …. er, erm….


  5. shortonoil on Wed, 27th Aug 2014 9:31 am 

    Between 2014, and 2015 the Etp model projects that petroleum production costs per barrel will increase by 6.8%. This is, of course, more than twice the rate at which the GDP is growing. Since producers have been looking to cost increases which align with inflation expectations they are being left with massively declining margins.

    At the same time the energy delivered to the general economy from petroleum is declining by 77,4000 BTU per barrel, or 2.8% per unit produced. The end consumer is being left with a less, and less valuable product. It is not surprising that they are resistance to paying more, and more for it.

    The squeeze of declining producer margins, and declining product value is simply an indication of the ongoing petroleum depletion event. It will continue regardless of policy, or tax regiments. It supersedes any man made economic hypothesis. Having pasted the energy half way point, petroleum is now in its decline phase. The down side will not be an inverted replicate of the up side. The energy dynamics of the event will assure that we will be, from here on out, dealing with an entirely different paradigm. Applying past models to future events will no longer work.

  6. Makati1 on Wed, 27th Aug 2014 10:53 am 

    shortonoil, your comment applies to economist’ projections also. The past is no indication of the future.

  7. Bob Owens on Wed, 27th Aug 2014 8:33 pm 

    Reality is starting to set in on all the oil production projections. Everyone will be projecting lower shortly.

Leave a Reply

Your email address will not be published. Required fields are marked *