Norway oil firms raise 2021 investment plans by 12%

OSLO (Reuters) - Oil and gas firms in Norway have boosted their 2021 investment plans in recent months reflecting higher costs and schedule changes including deferred and accelerated projects, a survey by the statistics office (SSB) showed on Thursday.

The investment forecast for 2021 has been raised by 12%, and oil companies are also expected to present significant oilfield development plans in 2022 in order to meet a deadline for tax relief on new projects, SSB said.

Investment, impacting both the near-term growth of Norway’s economy as well as the country’s longer-term output of petroleum, is still expected to decline in 2021, but the drop will be smaller than anticipated three months ago.

Investment in the country’s main economic sector is now projected at 166.3 billion crowns ($18.4 billion) next year, up from a forecast of 148.6 billion in August, SSB said.

Some ongoing developments have become more expensive, the agency said, and some plans have been delayed from 2020 to 2021.

“In addition, the increased estimate is due to the fact that some investments that were previously planned to be made in 2022 have now been accelerated to 2021,” SSB said.

Investment for 2020 is seen at 182.5 billion crowns, down from a previous view of 184.6 billion, SSB said.

Petroleum companies, including Equinor, have revived several projects after the Norwegian parliament in June granted tax incentives to spur investment and safeguard jobs amid the COVID-19 pandemic.

As a result, companies will spend significantly more next year than had previously been expected on field evaluation and development planning, the survey showed.

“The strong growth in these cost types reflects that several operators have plans to deliver (development plans) on large parts of the existing discovery portfolio on the Norwegian shelf during 2022,” SSB said.

“The accumulation of (development plans) in 2022 may be related to the tax package ... all development investments on which the plan is submitted before the end of 2022 will be covered by the same favourable tax rules,” it added.

Reporting by Terje Solsvik, editing by Gwladys Fouche and Jason Neely