Monday 20 July 2020

In the first half of 2020, activity on the Norwegian shelf has been characterised by the corona situation with restrictions on activity, a drop in demand and a declining oil price.

This spring, based on the extraordinary situation in the oil market, the Government decided to cut oil production as of June and through the rest of the year to contribute toward more rapid stabilisation of the oil market than what the market mechanism alone would have ensured. The Storting has also adopted temporary changes to the petroleum tax system to improve liquidity for the petroleum industry and better facilitate the companies in implementing planned investments. This will contribute to maintain activity and provide assignments for the supplier industry.

"There is still a basis for high, long-term value creation on the Norwegian shelf. The political decisions have helped stabilise an extraordinary and demanding situation. The temporary change will contribute to a continued high activity level, on par with what we forecasted before the pandemic and the drop in the oil price," Director General Ingrid Sølvberg says.

Following a clarification of the temporary change in the Petroleum Tax Act, two plans for development and operation have been submitted to the authorities for approval. These are the partial electrification of Sleipner and Hod re-development. It is also encouraging that the partners in the Krafla/Askja area have agreed on plans to develop the resources here.

"At the same time, we have noted that exploration activity has declined and will be lower this year than we presumed in January. However, we are experiencing that the companies are not cancelling exploration wells, but rather postponing them until next year," says Sølvberg.

Production

At the end of April, the authorities decided to cut Norwegian oil production by 250,000 barrels per day in June and by 134,000 barrels per day in the second half of the year. This was done to help stabilise the oil market faster, which is important out of consideration for sound resource management and the Norwegian economy.

The NPD has assisted the MPE in its work on regulating production. Production from gas and condensate fields, transboundary fields with short remaining production lifetimes and mature fields will not be cut.

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