Norway’s second quarter oil investment survey is set to release later this week by Statistics Norway. The survey will indicate the latest investment plans for the Norwegian continental shelf in 2020 and 2021. Owing to the considerable fall in oil prices and the elevated uncertainty about them in the future, exploration & production firms have postponed some and cut back on other investments. First quarter results indicate that most Norwegian E&P firms plan to cut Capex and exploration expenditure by 20 percent to 30 percent compared to previous estimates.
The previous survey indicated investment plans around NOK 185.4 billion for this year. However, the new estimate is likely to show investment plans amounting to NOK 155 billion, representing a year-on-year reduction by 12.5 percent, stated Nordea Bank in a research report. The estimate for 2021 is even more uncertain.
“We expect the Q2 survey to indicate NOK 145 (152) bn next year, which gives a y-o-y drop by 6.5 percent. We must emphasise that estimates differ significantly and future developments depend on how swiftly oil prices recover, but it seems reasonable to assume that investment activity will drop approximately 20-25 percent over the 2-year period 2020-21. As in 2015-16, this will be a drag on economic growth the next couple of years”, said Nordea Bank.
