Norwegian Producers Boost 2021 Capex Plans

Norwegian oil and gas producers have raised their capital expenditure plans for 2021 to Nkr 173.6bn ($20.5bn) this year, according to a survey published by the country's national statistics office (SSB) on February 17.

This is a modest boost from the November forecast of Nkr 166.3bn and marks a 6.4% fall in spending compared with last year's Nkr 185.4bn. 

Norwegian oil and gas investment rose 1% in 2020, despite the pandemic and the resulting oil and gas market volatility, thanks to increased spending on maintaining existing supply and decommissioning work, partly offset by cuts to exploration and field development.

Investment in 2020 is expected to slump 20% year on year to Nkr 138.5bn in 2022. This is also 8.9% lower than the estimate for 2021 that SSB published in the first quarter of 2020. The decline reflects the fact that a number of projects will be completed in either 2021 or early 2022.

According to SSB, plans for development and operation are expected to be submitted to the government this year for the Kristin South, Frosk, Kobra East/Gekko and Tommeliten Alpha oil and gas fields, as tax breaks continue.

The submission of these plans is a firm investment commitment, and very many more are expected to be filed by next year, SSB said. Norway's parliament approved some Nkr 100bn in tax relief last summer, which will be awarded to companies that file PDOs before 2023. Producers can also deduct the bulk of exploration expenses from their taxable income which encourages wildcat drilling.