Norway's Rising Oil Costs Hit Arctic Output Hopes

Norway's Rising Oil Costs Hit Arctic Output Hopes


OSLO, Jan 16 (Reuters) - Delays to flagship Arctic projects due to sharply higher costs and taxes, and lower oil prices, will hamper Norway's efforts to revive oil output stuck at a 25-year low, officials and companies say.

The development of several smaller fields, which often fly under the radar, is also either delayed or in doubt, the Norwegian Petroleum Directorate (NPD) told Reuters.

Cost in Norway's oil sector have roughly doubled between 2005 and 2012 and a tax hike unveiled last year pushed several projects over the edge just as oil firms around the globe increased efforts to reduce spending to save cash for dividends.

Norway expects oil investments to grow just 2 percent this year and next, a big drop from a decade of double-digit growth rates. It also cut its oil output forecast for the year.

"The problem is that we (as an industry) are too expensive and make too little profit," Mads Andersen, the Norwegian country chief of oil services firm Cameron said.

Statoil delayed some of its biggest projects, like the $15.5 billion Johan Castberg in the Barents Sea and its biggest find in decades, the Johan Sverdrup field with up to 2.9 billion barrels of oil.

The NPD said that Shell's Linnorm field in the Norwegian Sea, expected to pump about 100,000 barrels of oil equivalents per day, was delayed - with no new date for its development. There was also a risk Statoil would delay plans for its 50-million-barrel Trestakk project this year.


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