Investment in Norwegian Offshore E&P Falls Further
Statistics Norway's latest report on planned industrial investments, released Wednesday, finds that oil majors expect to spend even less than expected on Norwegian offshore projects in 2017.
The oil and gas investment estimate for next year now stands at $17 billion, down nearly four percent from the last forecast and down by more than 18 percent from the agency's estimate for 2016.
The pace of decline is the sector's steepest on record, and it is enough to reduce the estimate for Norway’s oil and gas, manufacturing, mining and electricity sectors combined by about 13 percent year-over-year.
The decline is due in part to lower estimates for exploration, consistent with the trends of the past 18 months, but it is also due to reduced decommissioning activity, Statistics Norway said. A number of removal projects that had been scheduled for 2017 have now been postponed.
The agency noted that if other projects in the development pipeline are approved and move forward in late 2017 rather than early 2018, the estimate will be revised upwards.
The downturn in oil and gas has led to the loss of thousands of jobs in Norway's offshore E&P sector and its shoreside supply chain. The decline has contributed to the nation’s rising unemployment rate, which now stands at about five percent (about on par with the United States). Ten years ago, only 25 out of every 1,000 Norwegians were unemployed.
Another tough year
Tommy Hansen, director of communications for the Norwegian Oil and Gas Association (Norsk olje og gass), said in a statement that "2017 will be a tough year, but we think we have reached the bottom."
He suggested that Statistics Norway's estimate was now closer to the association's own forecast, and said that the numbers also reflected a positive development – the cost reductions that oil firms had achieved, which will make the Norwegian continental shelf more competitive going forward.