OPINION: This week's Upstream exclusive about Shell moving ahead with the long-delayed Linnorm gas and condensate development adds to an increasing number of dormant Norwegian projects dusted down for action in the second half of this year.
In April, a study by Norwegian Oil & Gas Association estimated that offshore investments would fall by 50% from previous estimates due to the Covid-19 pandemic.
Less than a year later, a new estimate from Statistics Norway shows a meagre drop of just 4.2% in investments, with 2021 capital expenditure estimated at Nkr178.9 billion ($19 billion) and additional projects still unreported.
The rebound is attributed to the Norwegian parliament’s move, in June 2020, to approve a generous temporary tax-relief package for projects sanctioned by the end of 2022.
The package is estimated to reduce the breakeven oil price on field projects by an average of $10 per barrel.
Under the previous tax regime, fiscal terms in Norway were unfavourable compared with other mature provinces such as the UK and the US.
The temporary tax package has reversed things, and Norwegian continental shelf projects have come high on the oil companies' project rankings.
University of Stavanger petroleum economics professor Petter Osmundsen agreed there is little doubt that the Norwegian tax relief has proved successful in improving liquidity and making Norway's offshore arena more competitive.
The results are now there to be seen, with half-forgotten projects now marching toward sanctioning.
(This is an Upstream opinion article.)