Norway sees rapid growth in oil output from 30-year lows

Norway sees rapid growth in oil output from 30-year lows
Equinor says the Johan Sverdrup oil field, situated some 140 km off the southwestern coast of Norway, is expected to remain in production for at least half a century. (AFP)
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Updated 10 January 2020

Norway sees rapid growth in oil output from 30-year lows

Norway sees rapid growth in oil output from 30-year lows
  • By 2023, combined production of oil and gas is expected to reach close to record level

STAVANGER: Norway’s oil output will grow by 43 percent from 2019 to 2024 as new fields come on stream and older production facilities are upgraded, forecasts from the Norwegian Petroleum Directorate (NPD) showed on Thursday.

The numbers show a revival for Norwegian crude production, which last year fell to its lowest level since 1989 as older fields gradually depleted their reserves.

By 2023, combined output of oil and gas is expected to reach close to the record level seen in 2004, the agency said, although gas would have a greater share than before.

“This time oil will account for about half of the total,” NPD chief Ingrid Soelvberg told a news conference.

Crude output from the country’s offshore fields is now predicted to hit 2.02 million barrels per day in 2024, up from a 30-year low of 1.41 million last year, as major oilfields Sverdrup and Castberg gradually come on stream.

“After two years of lower output, production will rise again in 2020, mainly due to the startup of Johan Sverdrup but also due to other finds,” Soelvberg said.

Natural gas production is predicted to rise to 117.1 billion cubic meters (bcm) in 2020 from 113.2 bcm in 2019, but below a previous forecast of 120.2 bcm, it added.

The NPD now expects Norway’s oil output to total 1.76 million barrels per day in 2020, up from a previous forecast of 1.74 million made a year ago.

While exploration increased in 2019, to 57 wells from 53 the previous year, it will likely decline to 50 wells in 2020, the NPD said.

Exploration in the Barents Sea in the Arctic brought only one discovery last year, an area that once had been expected to be a new oil and gas province for the Nordic country.

State-controlled Equinor and its partners earlier on Thursday announced plans to further extend production from their Statfjord field, which has been producing since the 1970s and is now expected to remain on stream beyond 2040.

While Norway supports the 2015 Paris climate agreement, and aims to sharply reduce its domestic carbon emissions in the coming decades, it also says it will continue to pump and sell petroleum to others for as long as demand exists.

The Sverdrup field is expected to remain in production for at least a half century, according to Equinor’s plan. 


WEEKLY ENERGY RECAP: Despite long-term challenges, oil prices remain in healthy range

WEEKLY ENERGY RECAP: Despite long-term challenges, oil prices remain in healthy range
Updated 24 January 2021

WEEKLY ENERGY RECAP: Despite long-term challenges, oil prices remain in healthy range

WEEKLY ENERGY RECAP: Despite long-term challenges, oil prices remain in healthy range

Oil prices have been stable since early January, with Brent crude price hovering around $55. Brent crude closed the week slightly higher at $55.41 per barrel,
while West Texas Intermediate (WTI) closed slightly lower at $52.27 per barrel.

Oil price movement since early January in a narrow range above $50 is healthy, despite pessimism over an increase in oil demand, while expectations of US President Joe Biden taking steps to revive energy demand growth are
still doubtful. The US Energy Information Administration (EIA) reported a hike in US refining utilization to its highest since March 2020, at 82.5 percent. The EIA reported a surprise weekly surge in US commercial crude stocks by 4.4
million barrels. Oil prices remained steady despite the bearish messages sent from the International Energy Agency (IEA), which believes it will take more time for oil demand to recover fully as renewed lockdowns in several countries weighed on oil demand recovery.

The IEA’s January Oil Market Report came as the most pessimistic monthly report among other market bulletins from the Organization of the Petroleum Exporting Countries (OPEC) and EIA. It forecast oil demand will bounce back to 96.6 million bpd this year, an increase of 5.5 million bpd over 2020 levels.

Though the IEA has lowered its forecast for global oil demand in 2021 due to lockdowns and vaccination challenges, it still expects a sharp rebound in oil consumption in the second half of 2021,
and the continuation of global inventory depletion.

The IEA reported global oil stocks fell by 2.58 million bpd in the fourth quarter of 2020 after preliminary data showed hefty drawdowns toward the end of the year. The IEA reported OECD industry stocks fell for a fourth consecutive month at 166.7
million barrels above the last five-year average. It forecast that global refinery throughput is expected to rebound by 4.5 million bpd in 2021, after a 7.3 million bpd drop in 2020.

The IEA monthly report has led to some short term concern about weakness in the physical crude spot market, and the IEA has acknowledged OPEC’s firm role in stabilizing the market.

Controversially, the IEA believes that a big chunk of shale oil production is profitable at current prices, and hence insinuated that shale oil might threaten OPEC market share.

It also believes that US shale oil producers have quickly responded to oil price gains, winning market share over OPEC producers. However, even if US shale oil drillers added more oil rigs for almost three months in a row, the number of operating rigs is still less than half that of a year ago, at 289 rigs.

The latest figures from the Commodity Futures Trading Commission show that crude futures “long positions” on the New York Mercantile Exchange are at 668,078 contracts, down by 18,414 contracts from the previous week (at 1,000 barrels for each contract).