Higher oil prices and global expansion efforts have helped Norway's oil-industry supply chain triple annual revenues over the past dozen years and momentum is expected to continue even as domestic petroleum production continues to fall, according to a report released Tuesday that was commissioned by Norway's government.
Higher oil prices and global expansion efforts have helped Norway's
oil-industry supply chain triple annual revenues over the past dozen years and
momentum is expected to continue even as domestic petroleum production
continues to fall, according to a report released Tuesday that was commissioned
by Norway's government.
Norwegian oil-production suppliers--including National Oilwell Varco Inc.
(NOV), Aker Solutions ASA (AKSO.OS) and SeaDrill Ltd. (SDRL, SDRL.OS)--pulled
in a combined NOK361 ($62 billion) in 2011 amid a spate of investments by big
oil producers in Norway and abroad looking to increase oil recovery from
existing fields and pump money into new fields.
Good times for
Norway
's oil
supply sector--a core industry for the northern European state--are expected to
continue as these companies broaden their customer base beyond the Nordic
region, according to the report, conducted by the Rystad Energy analysis firm. Suppliers
provide a range of products needed for oil production, including rigs, drilling
services, and subsea installations.
The report was issued in conjunction with the
Offshore
Northern
Seas
conference taking place this week in
Stavanger
, on
the southwest coast of
Norway
. Norwegian
oil and gas producer Statoil ASA (STO, STL.OS) has its headquarters in
Stavanger
. Statoil
on Tuesday announced measures to step up Arctic activities by drilling nine
wells during a 2013
Barents Sea
exploration campaign.
Statoil's recent Skrugard and Havis discoveries are among the projects driving
the company's optimism, together with the giant
North
Sea
field Johan Sverdrup, which may contain 2.4 billion barrels of oil
equivalent, according to
Norway
's
Petroleum Directorate.
The Norwegian oil supply sector includes Fred. Olsen Energy ASA (FOE.OS), DOF
ASA (DOF.OS), AGR Group ASA (AGR.OS), BW Offshore Ltd. (BWO.OS) and Songa
Offshore SE (SONG.OS).
Norway
was
the 14th largest supplier of the world's oil in 2011, producing about 2.5% of
the world's oil on a daily basis, most of which is tagged for export.
Norway
's
domestic oil and natural gas industry has reputedly difficult conditions,
including the frigid conditions of
Norway
's
continental shelf. By confronting these technical issues in
Norway
, the
nation's suppliers have become more globally competitive, Minister of Petroleum
and Energy Ola Borten Moe said Tuesday.
Key international markets for Norway-based suppliers include
Brazil
,
Angola
, the
U.S.
and
the U.K. Rystad expects
Norway
oil-supply revenues from those nations in the subsea and installation segment
to nearly double to $40 billion by 2016; while revenue from rig and drilling
services are expected to grow 34% to $47 billion.
"Internationalization gives local ripple effects and powerful growth
impulses all across the country," Mr. Moe said.
Global expansion is necessary.
Norway
's
combined oil and gas production has fallen since 2004 and as output slows from
aging giant fields such as Ekofisk, Statfjord, Oseberg and Gullfaks. Still,
offshore oil and gas investments in
Norway
have
increased significantly, and are expected to remain strong.
The high cost of oil, with prices exceeding $100 dollars per barrel, is driving
much of the optimism by oil companies. High prices "means it's profitable
to develop fields with higher break-even oil price," the Rystad Energy
report said.
The firm expects global onshore oil and gas production at 104 million barrels
per day in 2030, and offshore production at 67 million barrels per day. In
2005, onshore oil and gas production ran at a pace of about 100 million barrels
of oil equivalent per day, and offshore production was 41 million barrels.
New production from deep and ultra deep waters is expected to be twice as high
in the period from 2021 and 2025 compared to the 2011 to 2015 period,
indicating continued demand for deep water rigs and equipment that Norwegian
companies supply.
Wood Mackenzie, a separate oil analysis firm, said in a report issued Tuesday
that
Norway
will
be the fifth-biggest spender on development projects in the world. Investments
are expected to reach $25 billion in 2012, up 30% from 2011, and forecast to
increase to $30 billion in 2015.
"Over the next three years, we estimate over US$82 billion will be
invested in
Norway
's
upstream sector," Ross Cassidy, a Wood Mackenzie research analyst said.
Statoil and
Petoro
AS
, which
manages the Norwegian government's State Direct Financial Interest direct
ownership in oil fields, will invest around US$40 billion combined, around half
of the total investment in this period, Wood Mackenzie said.
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