Bloomberg News

Norway’s Budget Forecasts Lower Petroleum Output Next Year

October 06, 2011

Oct. 6 (Bloomberg) -- Norway, the world’s seventh-largest oil exporter that’s struggling to keep up output as fields mature, forecast petroleum production will decline by 1.3 percent next year.

Output will slip to 226 million standard cubic meters of oil equivalent from an estimated 229 million cubic meters this year, the government said today in its 2012 national budget.

The country is basing its budget revenue on oil prices averaging 588 kroner ($100.5) a barrel this year and 575 kroner a barrel in 2012, according to the document. Gas prices are estimated at 2.05 kroner per cubic meter in 2011 and 2.10 kroner in 2012.

“There’s considerable uncertainty regarding gas prices going forward,” the government said in the budget document. “While strong growth is still expected from China and other emerging markets, the forecasts for the U.S. and Europe have been significantly revised down over the summer.”

Norway, which is also the world’s second-biggest gas exporter, is facing dwindling production due to maturing fields. Output peaked in 2000 and may drop 6 percent this year to about 1.7 million barrels a day, according to the Norwegian Petroleum Directorate. Recent oil discoveries made by Statoil ASA and Lundin Petroleum AB, including the Aldous-Avaldsnes find in the North Sea that may be the country’s third-largest, have raised the prospect of extending production.

Norway’s oil production, including natural-gas liquids and condensate, is forecast at 120 million cubic meters of oil equivalent this year, 115 million next year and 109 million in 2015, according to today’s budget bill. Gas output is forecast to climb from 109 billion cubic meters in 2011 to 111 billion next year and 112 billion in 2015.

‘Strong Growth’

Petroleum investments are forecast to reach a record 172 billion kroner next year, from an estimated 152 billion kroner in 2011, according to a quarterly survey published last month by Norway’s statistics agency.

“It’s uncertain how much of the strong growth can be attributed to prices and volume growth,” the government said. “We anticipate the volume growth in the petroleum investments to be 12.5 percent this year and 11 percent next year.”

The nation’s petroleum industry, which accounts for about a quarter of the economy and has shielded the country from the worst of the credit crisis, is forecast to contribute 341 billion kroner in net cash flow to the budget this year and 352 billion kroner in 2012, the government said.

--Editors: Stephen Cunningham, Alex Devine.

To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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