Norwegian companies plan to cut oil and gas exploration and production spending by six percent this year

Companies involved in oil and gas exploration and production off the Norwegian coast plan to cut spending by around six percent this year to 256 billion Norwegian kroner (CZK 527 billion). The reason is that several major projects are nearing completion and the pace of new project start-ups is slowing. The Norwegian Offshore Directorate, the state agency responsible for managing the Norwegian continental shelf, said this today in its annual report. Although the amount is lower year on year, it is still higher than companies spent annually in the previous decade.

According to the state agency, exploration activities carried out last year delivered the best results since 2021. These activities included a campaign by Aker BP, during which three of the longest well branches drilled on the Norwegian continental shelf were completed; the longest measured almost 11 kilometres. The agency also said it expects around 40 exploration wells to be drilled this year.

While oil and gas production is expected to remain at the same level through the end of the decade, a lack of investment will cause the industry to contract significantly in the coming years, the agency added.

"Many projects are currently under way, and many will be completed in the coming years and ready to start production," state agency director Torgeir Strodal told Bloomberg.

"The most important thing going forward is for new investment decisions to be made," he added.

Oil production in Norway rose to around 670 million barrels of oil equivalent last year, its highest level since 2009. Growth was driven mainly by Equinor ASA's Johan Castberg field in the Barents Sea and Var Energi ASA's Balder X project in the North Sea. Oil production in Norway peaked at the beginning of the 21st century, but several major discoveries over the past decade have helped slow the long-term decline in output.

Investments in recent years were supported by tax breaks introduced during the pandemic, leading to a huge number of investment plans being submitted in 2022. However, the rebound in activity, limited supplier capacity and the extension of the lives of many fields have pushed up costs, the state agency warned.

Norway sold 120 billion cubic metres of natural gas last year, slightly less than the previous year. Production took place at a total of 97 fields, with the large Troll field accounting for roughly one-third of total output, the agency added.