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Oil slump may force firms to quit mature Norwegian fields early: directorate
[SANDEFJORD, Norway] The low oil price could force firms to abandon Norway's mature fields early, leaving recoverable deposits in the ground and shortening the lifetime of some projects, the head of the country's oil directorate said on Wednesday.
If prices stay low, companies could also delay future projects, accelerating a fall in crude production after 2020, Bente Nyland told Reuters on the sidelines of a conference.
Brent crude has fallen close to 60 per cent over the past seven months and Norway's oil industry, which generates a fifth of the country's GDP, is cutting spending, delaying or cancelling projects and laying off workers.
"These (mature) fields can be adversely affected by the low oil price in the short term, which means that the tail end of production will be shorter," Mr Nyland said. "It can become a problem because I think it will be challenging to reverse these decisions later."
Norway's oil output has been falling since 2000 and increasing recovery has been a priority for the directorate and Petoro, the government's oil sector holding firm.
Recovering the last barrels in fields is the most expensive and some recent cost cuts have involved delays to increased recovery efforts.
One of the biggest projects that hangs in the balance is Statoil's US$5.7 billion plan to squeeze another 300 million barrels of oil equivalents from the Snorre field.
Decisions to delay increased recovery spending are difficult to reverse because offshore facilities have limited lifetimes.
"In addition many planned fields will be affected as they get postponed," Mr Nyland said. "From 2020 the current fall in production could accelerate."
Mr Nyland earlier predicted that investments in Norway's oil sector will fall by 15 per cent this year as energy companies axe US$22.7 billion worth of spending planned for the next five years.
High taxes and the world's best paid oil workers - with average annual salaries of almost US$180,000 according to recruitment agency Hays - make Norway one of the most expensive countries for the oil industry to operate in.
Mr Nyland also predicted oil production would fall to 1.39 million barrels per day (mmboe) in 2019 from 1.51 mmboe in 2014, possibly more if oil prices stay below US$60 per barrel. Brent crude traded just above US$48 on Wednesday.
In a licensing round on Tuesday, Norway awarded 54 blocks in mature areas to 43 firms, and invited bids for new acreage further inside the Arctic Circle.