Norway Estimates 2008 Oil Production at 2.5 Million bpd

Mrs. Aslaug Haga, Minister of Petroleum and Energy says high oil prices will continue to generate a high income for the Norwegian state in the next few years. However, the level of Norwegian oil production has not been this low since 1994. As a considerable oil-producing country with a responsible resource management we have to intensify the effort, especially on existing fields and exploration activities, to slow down this negative trend. It will require a considerable effort from the industry as well as from the authorities.

Since the start-up of the oil activities in Norway roughly a third of the expected recoverable petroleum resources has been produced. We have produced a considerably larger amount of oil than gas. Today approximately half of the total expected oil resources have been produced. The remaining resources are mainly connected to existing fields, or they are yet to be discovered. A strong focus on existing fields and on exploration is crucial to ensure a long-term development on the Norwegian continental shelf.

In the National Budget for 2008 the average price of Norwegian crude oil is estimated at NOK 400 per barrel for 2007 and NOK 360 per barrel for 2008. This is an upward adjustment compared to the Revised National Budget for 2007 (RNB 2007). There is a considerable uncertainty with regard to the development of future oil prices, due to a continued growth in demand for oil combined with limited spare production capacity globally, and uncertainties in future oil supplies from several countries.

Total oil production (including NGL ) is estimated at 2.6 million barrels per day in 2007. This is the lowest level since 1994. The production is expected to be around 2.5 million barrels per day in 2008 og 2009, before gradually decreasing. Expected production in the next few years has been slightly adjusted downward compared to RNB 2007.

-Gas production on the Norwegian continental shelf is steadily increasing. Both the Snøhvit and the Ormen Lange fields will start production this year, says Åslaug Haga, Minister of Petroleum and Energy.

With these two fields in production we will have a considerable increase in the gas production on the Norwegian shelf. Gas sales in 2007 are estimated at 88 billion cubic meters (bcm), and are expected to increase to about 108 bcm in 2008. The gas sales are expected to continue growing after 2008.

In 2007 petroleum investments (including investments in exploration) are expected to reach about NOK 117 billion. This is an increase of about 15 percent from 2006 and an adjustment upward of the investment forecast compared to RNB 2007. In 2008 investments are estimated at NOK 120 billion. The investments are expected to stay high in subsequent years.

The State’s net cash flow from the petroleum sector is estimated at NOK 319 billion in 2007. Taxes and fees constitute NOK 194 billion, the net cash flow from the State Direct Financial Interest (SDFI) NOK 112 billion and dividend from Statoil NOK 14 billion. The estimate for the State’s net cash flow has increased by NOK 18 billion compared to RNB 2007. The main reason for this is increased oil price estimates, which more than offsets the reduction in production estimates. In 2008 the net cash flow is expected at NOK 302 billion.