Norway Sees Crude Output at 2mn b/d in 2025

Crude production offshore Norway will increase to more than 2mn b/d in 2025 from 1.7mn b/d now, much of it from the giant Johan Sverdrup field, the Norwegian Petroleum Directorate (NPD) said today. It sees gas output steady in the next decade.

Crude output was higher in 2020 than a year earlier, thanks to the first phase of Johan Sverdrup that came on stream in October 2019. The project's Phase 1 production capacity is now around 500,000 b/d. Phase 2, which will take the field's capacity to 720,000 b/d, is due on stream at the end of 2022.

NPD said that gas production "has held steady at a high level for many years, and this will continue for the next eight to 10 years." Oil and gas output averaged 3.89mn b/d of oil equivalent (boe/d) last year, up from 3.69mn boe/d in 2019. NPD sees it at 3.95mn boe/d this year, rising to 4.36mn boe/d in 2024 and 2025.

NPD said that emissions have started to decline, thanks in part to increasing use of power from shore. Given existing approved plans, CO2 emissions will be 3.2mn t/yr lower in 2023 than would otherwise have been the case, it said, and additional projects could deepen this fall to 4.9mn t/yr or close to 40pc of total emissions from the industry in 2019.

"Declining emissions from production and great capacity for storing CO2 could give the Norwegian shelf an important role on the path toward the low-emission society", NPD director general Ingrid Solvberg said.

NPD said that 14 discoveries were made offshore Norway last year and four fields came on stream — Tor, Skogul, Aerfugl and Dvalin, all of which utilised existing infrastructure in mature areas.

"These are the types of field developments we will see even more of in the future. Therefore, it is essential that the infrastructure is maintained and made available for phase-in of additional resources," NPD said.

Investments in Norway's oil and gas industry — excluding exploration — increased by close to 3pc last year, to 155bn Norwegian kroner ($18bn). NPD expects investments of around NKr140bn in 2021, and then for this to decline to NKr127bn in in 2022 and then rise again to NKr138bn in 2025.

"Among the factors responsible for the high investment level are the fact that more new fields are being developed, and further development projects are being implemented on operating fields," it said.

NPD said that its expected level of investments over the next five years has been boosted by more projects under way on operating fields, and a temporary tax adjustment made in June last year. It expects to receive a "high number" of new plans for development and operation (PDOs), in part thanks to the temporary tax incentives.

NPD expects around 40 exploration wells to be drilled in 2021, compared with 31 spudded in 2020 of the around 50 that were planned for the year. The exploration under-performance was mostly caused by the Covid-19 pandemic, NPD said.

It said that the the average unit cost in the period from 2010-19 was $21/bl, while the average oil price during that period was nearly $80/bl.

"This difference underlines the vast values generated during the period," it said.