Norway Oil Industry Standardizes Contracts In Bid To Cut Costs

OSLO, Oct 20 (Reuters) - New standard practices in Norway for establishing contracts between oil firms and their suppliers will lower costs and increase competitiveness in a period of low crude prices, the head of the country's oil and gas lobby said.

Oil companies and their suppliers signed two deals on Tuesday to standardise contract practices in an attempt to drive down costs, which roughly doubled between 2005 and 2012.

The contract standards cover the development of new oil installations and the modification of existing ones.

"These contracts contribute to lesser costs for each company winning contracts and for operators giving contracts," Karl Eirik Schjoett-Pedersen, head of the Norwegian Oil and Gas Association, told Reuters.

Norway, the world's seventh-largest oil exporter and third-largest gas exporter, was until recently considered an expensive but risk-free place to do business, with predictable regulations and working conditions.

But plunging crude prices have prompted a sharp decline in investments by oil firms on the Norwegian continental shelf this year.

"Many say the challenges the industry faces are because of reduced oil prices. That is partially correct. The main reason is the very high growth in costs during the 2000s," Schjoett-Pedersen said.

(Reporting by Henrik Stolen; Editing by Dale Hudson)