Strong growth in oil investments for 2019

The estimate for 2019 is 1.1 per cent lower than the estimate given in the previous survey.

The investments in oil and gas extraction and pipeline transport for 2020 are estimated at NOK 174 billion, which is 1 per cent higher than estimated in the previous quarter. The estimate for 2020 is 5.4 per cent higher than the corresponding estimate for 2019 given in the 3rd quarter of 2018. The previous survey suggested a growth of 10.8 per cent.

The plan for development and operation (PDO) on the project Balder X is expected to be submitted to the government this autumn. This is an extensive redevelopment project which will probably have relatively high investments in 2020. PDOs are also expected to be submitted for some minor projects in 2020. If the schedules for these plans are realised, the accumulated investment costs in 2020 from these projects will increase the investment in field development compared to the present estimate.

There is therefore reason to believe that the estimates for 2020 will increase in future surveys, especially when Balder X is included in the survey. However, as figure 2 below illustrates, the estimates for 2019 increased markedly in the previous survey. Therefore, there is still great uncertainty surrounding whether the final investment growth in 2020 will be positive or negative. 

Quarterly investment statistics for oil and gas extraction and pipeline transport are included in the survey ‘Investments in oil and gas, manufacturing, mining and electricity supply’. For more details about total investments, please see the following article.

2020: Higher field estimates and lower exploration estimates

The investments in fields on stream for 2020 are estimated at NOK 66.3 billion. This is 4.1 per cent higher than the estimate given in the previous survey. Since the previous survey, the operators on the Norwegian continental shelf have delivered their preliminary budgets for the next year. This update has in sum resulted in higher estimates in fields on stream. The estimate for field development is now NOK 63.7 billion, which is 6.2 per cent higher than the estimate given in the previous quarter. The higher estimate is partly due to the delivery of a PDO on another development project. This project is now included in this survey.

The estimate for exploration and concept studies for 2020 is now NOK 32.3 billion, which is 13 per cent lower than estimated in the previous survey. Some exploration wells which were included in the previous estimate are now postponed or have been dropped due to new information.

The increase in 2020 compared to the estimate for 2019, given in the 3rd quarter of 2018, is due to higher investments within the categories fields on stream, shutdown and removal, and exploration, while the estimates indicate a decrease in the investment category field development. 

Strong investment growth in 2019

The investments in oil and gas extraction and pipeline transport for 2019 are estimated at NOK 182 billion. This is 1.1 per cent lower than estimated in the previous quarter.

The estimate for 2019 is 16 per cent higher than the corresponding estimate for 2018 given in the 3rd quarter of 2018. The estimated increase from 2018 to 2019 is due to higher investments within the categories field development, fields on stream and exploration. 

Increasing investment activity in the 2nd quarter

The accrued investments from the 1st quarter to the 2nd quarter increased by 16 per cent, from NOK 38.2 billion to NOK 44.3 billion. The seasonally adjusted growth from the 1st quarter to the 2nd quarter came to 4.6 per cent. 

High estimates for the second half of 2019

The investments in the first half of 2019 are 19 per cent higher than the investments in the first half of 2018. While the accrued investments in the first half of 2019 are accumulated to NOK 82.5 billion, the investments in the second half of 2018 are estimated to increase by 20 per cent, to NOK 99.2 billion. Figures from the last 18 years show that investments on average have been 10 per cent higher in the second half of the year than the first half. In five of these years, the investments have increased by about 20 per cent.

In the last 18 years, the estimates given in the 3rd quarter have been on average 4 per cent higher than the final investments. In only one of these years, in 2001, were the final investments higher than estimated in the 3rd quarter.

The drilling activity in July and August indicates investment growth from the 2nd to the 3rd quarter. In addition, the development project Balder X is expected to be included in the next survey. If so, investment costs in 2019 from this project will increase the accumulated investments in 2019 further, compared to the present estimate, all other things being equal.

These factors give reason to believe that a greater portion than usual of the investments that are now planned for the second half of 2019 will actually be accrued in 2019.