NPD Head: Norway's New Oil Finds May Help Stem Mid-Term Output Fall
Two major oil finds this year by Norwegian oil and gas giant Statoil (STO) could stave off a steep decline in Norway's production in the mid-term, but won't reverse the longer downward trend, Bente Nyland, head of the Norwegian Petroleum Directorate has told Dow Jones Newswires.
This summer's find in the North Sea that is one of the 10th biggest discoveries ever on the Norwegian continental shelf and the earlier slightly smaller success in the Barents Sea complement measures to tackle the fall in the short- and mid-term that are being considered and implemented by the Scandinavian country.
However, ultimately Norway will have to open up new areas and that is more problematic.
"In the short- and mid-term it's important to keep and increase recovery, to have new finds in production and build out what you have found. While in the long run, it's necessary to discuss whether to open up new areas. And that is a political question," Nyland said.
Norway this year reached a treaty with Russia over a long disputed maritime border in the Barents Sea. But it could be a while before this new zone is opened up for exploration, Nyland said the quickest scenario would be around two or three years.
The petroleum directorate has started collecting seismic data from the region and Nyland, a geologist and head of the government body since 2008, said some indication of the region's resources could be given in 2012-13.
The state agency, tasked with overseeing Norway's oil and gas activities, predicts total production will be kept at about the current level until around 2020-25, Nyland said.
Norway's oil production peaked in 2001. Gas production is still rising but Nyland said she expects output to begin decreasing some time at the start of the 2020s given the lack of large gas finds.
"Gas production will to some extent fill in the gap in coming years," she said, adding that increasing the recovery rates in existing oil fields will be critical in the short term.
The petroleum sector is Norway's largest industry. Investments next year in oil and gas activities are seen at a record-high NOK172 billion ($32 billion), according to a recent forecast from Statistics Norway.
Last week, the Norwegian krone climbed to an eight-year high as traders sought a new safe haven after the Swiss National Bank capped the value of the Swiss franc against the euro.
"We have no indications that companies have become more restrictive. But it's too early to say," Nyland said.
In January, the Norwegian Petroleum directorate revised down estimates for undiscovered resources on the Norwegian continental shelf, to 2.6 billion standard cubic meters of oil equivalents from 3.3 billion standard cubic meters of oil equivalents.
"This year's finds give no base for changing our analysis," she said.
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