Norway Oil Investment To Fall Next Year, Then Level Out
OSLO, Nov 11 (Reuters) - Investment in Norway's vast oil sector will fall sharply next year before levelling out for four years as energy firms, grappling with lower oil prices, continue to work on relatively profitable projects, the industry's lobby group said on Tuesday.
Over the past year oil companies have reined in capital spending after a decade-long boom due to rising costs and, in recent months, falling oil prices.
Oil investments will fall to around 197 billion crowns ($28.9 billion) next year from 221 billion crowns in 2014, and then hold between 190 billion crowns and 205 billion crowns per year through to 2019, Norway's Oil and Gas Association said.
"We have several projects that are quite profitable," Bjoern Harald Martinsen, the lobby group's chief economist said after presenting its annual report on the industry's outlook.
Several of the oil and gas fields coming up for development remained attractive projects, he said, despite oil prices falling 30 percent since the end of June.
Among them is Statoil's giant Johan Sverdrup field, which could contain up to 2.9 billion barrels of oil and has a break-even price of $37, oil consultancy Rystad Energy says.
Martinsen said the analysis was based on oil prices staying around $85 in the coming years. If they were to fall below that, oil firms would curtail spending further, he said. Brent crude was trading at $81.70 a barrel at 1200 GMT after hitting a four-year low on Tuesday.
Erik Bruce, chief analyst at Nordea Markets, noted the report argued the investment fall would be less than feared, even with oil prices down to $85 per barrel.
"An indication that Norges Bank will revise its forecast for growth and rates less down in the December report," he said.
Costs, which have nearly tripled over the past decade, are seen staying broadly flat until 2019, the lobby said. Last year it predicted costs rising a fifth over the following five years.
Martinsen said the change was mainly due falling rates for drilling rigs, which have been in oversupply in recent months, and falling prices for material and equipment.
Investments are seen at 192 billion crowns in 2016, 190 billion in 2017, 205 billion in 2018 and 198 billion in 2019, when measured in 2014 crowns, a two-percent downward revision on forecasts the lobby had for these years in last year's report.
(Reporting by Gwladys Fouche, editing by David Evans)