Offshore hopes: Norway said it expects to see offshore production decline
Norway counts on output dip
Norway expects oil prices to rise next year, but sees its total output dropping by about 1.3% on this year's figures, the government said in its 2010 draft budget, unveiled today.
The government also unveiled plans to spend more of its oil wealth next year compared to this year in a bid to help the economy regain speed after a mild recession.
Economists told Reuters spending plans in the draft 2010 budget were more expansive than expected, but the government said the budget was lax because unemployment was expected to rise.
Oil production, including natural gas liquids and condensate, was seen at 126 million cubic metres of oil equivalent - about 792 million barrels - next year, down from 133 MMcm, or about 836 million barrels, this year. Oslo expects gas output to rise.
Including gas, output was seen at 233 MMcm of oil equivalent, down from 236 MMcm this year. The budget saw output sliding 230 MMcm in 2015.
"Whereas gas production is expected to increase by around 8% from 2008 to 2010, a decline in oil production of about 15% is expected in this period," reuters quoted the government as saying.
Total oil production, including natural gas liquids and condensate, is estimated at 2.3 million barrels per day in 2009, a 7% drop on last year, the energy ministry said.
While oil production is in decline as North Sea fields mature, gas production is set to rise to 103 billion cubic metres, an increase of about 7% compared with 2008.
The budget envisages the average price of Norwegian crude at Nkr375 ($66.54) per barrel this year and at Nkr425 next year. London Brent crude traded around $72 per barrel today.
"With an improved economic outlook, oil demand is expected to grow into 2010," the energy ministry said in a statement.
"Together with continued constraints on Opec production, this gives reasons to expect a tighter market balance and firmer oil prices next year," it added.
The budget said that investment in Norway's oil and gas fields would amount to Nkr118 billion next year, still a relatively high level compared to recent years but down from Nkr135 billion seen in 2009.
The decline in investment, triggered by lower oil prices, could have an impact the offshore services sector, a Reuters report said.
"We still feel the effects from the financial crisis," Energy Minister Terje Riis-Johansen said in a statement.
"The supply industry is reporting demanding conditions and lower rates of incoming orders. As a consequence, the government is working to secure a competitive supply industry, which contributes to industry development and employment."
Further details were not immediately available.
It said that 38% of a total of 13.4 billion cubic metres of recoverable resources off Norway have already been produced, with more than half of the oil gone and a little more than a fifth of the gas pumped out.