Norway Faces Oil and Gas Project Delays with Crude Slump

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Photo credit: Kjetil Alsvik – Statoil ASA
By Mikael Holter

Nov. 19 (Bloomberg) — Norway faces more delays in offshore oil and gas projects and reduced exploration next year after the value of crude slumped by a third, according to the industry regulator for western Europe’s biggest oil-producing country.

The Norwegian Petroleum Directorate probably won’t get any development plans this year after earlier expecting 14 for 2014 and 2015, Director General Bente Nyland said in an interview.

“Several projects will probably be delayed,” Nyland said today in Stavanger. Next year, the number of exploration wells will drop from a record of about 60 in 2014, she said, declining to give an estimate before an annual review in January. “If it goes down to 30 or 40, that’s not necessarily a big crisis.”

Oil prices are down about 32 percent since a June high, with Brent crude below $79 a barrel as global supply outpaces demand on booming output from shale reservoirs in the U.S. Lower prices reduce projects’ profitability as oil companies such as Statoil ASA, Norway’s biggest energy company, rein in spending after a decade of rising costs cut into shareholder returns.

Investments in Norway could slide by as much as 18 percent in 2015 from a record 227 billion kroner ($34 billion) this year, the country’s statistics bureau has said.

Statoil sees its exploration activity in Norway about the same next year as this, Senior Vice President Ivar Aasheim said at a conference in Stavanger. The 67 percent state-owned company has drilled 20 to 30 exploration wells a year in Norway since 2010, he said. Statoil is working to raise profitability at its Snorre 2040 project designed to boost output from the North Sea field as much as 300 million barrels, Aasheim said.

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