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Investment uptick off Norway

Govt sees higher spending for key oil and gas sector in state budget for 2018

The Norwegian government expects a marginal uptick in oil and gas investments next year, with income for state coffers also expected to increase from the key sector.

Total investments, including exploration and decommissioning, are forecast at around Nkr157 billion ($19.8 billion) in 2018, compared with about Nkr150 billion this year, according to figures in the state budget released on Thursday.

There has been a turnaround in field development and exploration activity off Norway after an earlier slump as cost-cutting by operators such as state giant Statoil has enabled them to reduce the commercial threshold for projects in a lower oil price regime, while lower contractor costs in drilling and oilfield services has also stimulated renewed spending.

“It is gratifying to see signs of optimism in the petroleum sector that is visible through increased investments and activity on the Norwegian continental shelf,” Petroleum & Energy Minister Terje Soviknes said.

“The industry has taken the necessary action to reduce costs and improve efficiency to enable more projects to be realised in future.”

The ministry has also revised upwards by 1% its estimate of net cash flow from oil and gas activities to Nkr183 billion next year - including taxes, earnings from the state’s offshore assets and Statoil dividends - based on a projected oil price of Nkr439 ($55.50) per barrel.

The country’s recoverable hydrocarbon resources are estimated at nearly 90 billion barrels of oil equivalent, of which about 48% were produced by the end of last year.

Meanwhile, the government intends to boost its backing for state agency Enova to Nkr2.7 billion next year for development of future-oriented renewable energy and climate-related projects.