Denmark Riding High on Oil Revenue
The large oil production in 2005 combined with a high oil price means that Denmark has received record-high taxes and fees in excess of DKK 24 billion from the activities in the North Sea, a more than DKK 7 billion increase on revenue in 2004. This appears from the report "Oil and Gas Production in Denmark 2005, which the Danish Energy Authority (DEA) published in Danish yesterday.
The oil produced from fields in the Danish part of the Central Graben almost totaled 22 million m3 in 2005, about 3 per cent less than in the record year 2004. However, gas sales of 9.2 billion Nm3 in 2005 exceeded the previous record from 2004.
Over time, the oil companies have invested huge sums in the exploration, development and operation of fields in Danish territory. Total expenses until 2005 have been estimated at a figure close to DKK 200 billion. In 2005, the oil companies invested almost DKK 4 billion in developing the 19 producing fields, and investments are expected to rise in the years ahead.
In the report, the DEA has assessed that Danish oil and gas reserves constituted 257 million m3 of oil and 122 billion Nm3 of gas at 1 January 2006. This corresponds to a decline of 4 and 8 per cent, respectively, compared to the assessment made at 1 January 2005. For the first time, aggregate oil production from 1972 until 2005 exceeds the total reserves estimated to be recoverable from 2006 onwards. This may change if further reserves are added.
The total production of oil, gas and renewable energy in 2005 was 58 per cent higher than total energy consumption, an increase on 2004. This increase is mainly attributable to the writedown of the energy consumption forecast in "Energy Strategy 2025". This is a continuation of the development that began in 1997, when Denmark became self-sufficient in energy. According to the DEA's most recent forecast, the total production of oil and natural gas in Denmark will exceed consumption up to and including 2015.
On 22 May 2006, 14 new licenses were awarded for areas in the Central Graben and adjoining areas in the 6th Licensing Round. The report describes the results of the licensing round. The keen interest shown by oil companies guarantees that exploration will continue and underpins the expectation that Denmark will remain an oil-producing nation for many years to come.
A new Act on Safety, etc. on Offshore Installations was passed in December 2005. The new Act, which enters into force on 1 July 2006, is to create the basis for a transparent and user-friendly set of rules that will help meet the objective for health and safety standards in the Danish part of the North Sea to rank among the highest in the North Sea countries. The report sets out the principles of the new Act, and also reviews the key elements involved in supervising health and safety issues in 2005.