UPDATE 1-Norway budget sees oil, gas output down in 2012

* Sees 2012 output at 1.42 bln boe vs 1.44 bln boe in 2011

* Sees oil price at $97.5 in 2012 vs $99.7 in 2011

* To finance seismic studies in Barents zone, off Jan Mayen (Adds detail, quotes)

By Gwladys Fouche

OSLO, Oct 6 (Reuters) - Norway projected in its 2012 draft budget that oil and gas output would fall to 226 million standard cubic metres of oil equivalent (1.42 billion barrels) in 2012 from 229 million cubic metres seen in 2011.

It said investments in Norway's vast offshore sector would reach a record high of 172 billion crowns ($29.2 billion) in 2012, up from 152 billion crowns in 2011, repeating figures earlier published by the Norwegian statistics bureau.

"The investment volume in the oil and gas sector will grow by 12.5 percent this year and 11 percent next year," said the finance ministry in the draft budget.

Non-OPEC Norway is the world's No. 8 oil exporter and western Europe's biggest gas exporter.

Its oil production has been declining as North Sea oilfields mature, although recent discoveries in the North Sea and Barents Sea have renewed optimism. Natural gas output has been on the rise in recent years.

The fiscal plan envisaged crude oil prices at an average of 575 crowns ($97.5) per barrel in 2012, down from 588 crowns in 2011.

Brent crude oil for November is currently trading at $103 per barrel.

The government said it would propose 260 million crowns to finance further seismic studies in a Barents Sea zone between Russia and Norway that may hold rich oil and gas resources, after Moscow and Oslo resolved a border dispute last year.

Norway began this summer to gather seismic data in the region, which involves mapping out the seabed in search of oil and gas deposits.

The 260-million-crowns would also finance seismic studies off the coast of Jan Mayen, a Norwegian volcanic island in the Arctic Ocean to the northeast of Iceland and east of Greenland.

The oil and energy ministry is evaluating whether to open the area to oil and gas firms.

The government will also gather "information" on offshore areas outside the Lofoten islands, a pristine archipelago north of the Arctic Circle at the centre of a political dispute that threatened to bring down the governing coalition this year.

Under a deal brokered in March, authorities cannot make an impact study of drilling in the region, the first legal step to open the zone to oil exploration, but instead can gather "information". ($1 = 5.896 Norwegian Kroner) (Editing by Keiron Henderson)