The Norwegian oil and gas market is expected to register a CAGR more significant than 7.5%. Factors, such as huge investment and government policies, are likely to drive the oil and gas market in Norway, during the forecast period. Oil companies increased their spending for the first time in 2018, since 2014. This is expected to propel the Norwegian oil and gas market. However, the Government of Norway is expected to divest investments from the oil and gas sector and increase the investments in alternative energy, which may hinder the growth of Norway's oil and gas market during the forecast period.
- The oil and gas upstream sector is expected to dominate the Norwegian oil and gas market, owing to discoveries in the North Sea.
- The increasing demand for LNG in the country leads to the integration of smart technologies in the existing LNG infrastructure, which may create an ample amount of opportunities for the market in the coming years.
- Lower breakeven prices are expected to drive the Norwegian oil and gas market, mainly achieved by project re-engineering, efficiency gains, better expense management, and drop in oilfield services cost, due to lack in demand for services.
Key Market Trends
Upstream Sector to Dominate the Market
- The upstream oil and gas investment in Norway has witnessed significant changes since 2014. Though oil production increased during 2014-2016, the operating cost declined during the same period.
- However, the oil production of Norway has declined significantly. During 2016-2018, the oil production of the country declined by about 8%, and it is expected to further decline by another 4.7% by the end of 2020. However, the production is expected to witness a boom from 2021, as major fields begin production.
- In order to offset the decline in production from mature oilfields, the upstream oil and gas companies are investing heavily in developing new oilfields. Moreover, the drop in breakeven prices has turned many oil and gas projects in the country profitable, which were first considered economically unviable due to low oil prices.
- Moreover, in 2019, the investment in the Norwegian offshore oil and gas industry (excluding exploration) increased by 13%, to more than NOK 140 billion. A number of small projects received FIDs in 2017, 2018, and 2019, and they are expected to come online in 2020 and 2021.
- Hence, investments and policies for new oilfields are expected to be the biggest and the most dominating drivers for the Norwegian oil and gas upstream market, during the forecast period.
Lower Breakeven Prices are Expected to Drive the Market
- The oil and gas industry, especially the upstream sector, is dependent on the price of crude oil. Prior to 2014, one of the major problems faced by the Norwegian petroleum industry was the high breakeven prices.
- Some of the major companies, such as Statoil, now Equinor, registered a negative cash flow for some of its fields in 2013, despite the high oil price of USD 112 per barrel. After the steep oil price drop, which started in late-2014, almost every oilfield in the country became unprofitable.
- However, during 2014-2017, many oilfields registered a drop in breakeven oil prices. As of 2018, Equinor’s breakeven oil price for its entire upstream portfolio was about USD 27 per barrel. The drop in breakeven prices was mainly achieved by project re-engineering, efficiency gains, better expense management, and drop in oilfield services cost, due to lack in demand for services.
- This drop-in breakeven price has turned many projects profitable, which were first considered economically unviable due to low oil prices, for example, Johan Sverdrup and Johan Carstberg, which are expected to account for a significant share in Norway’s oil and gas industry investments.
- Hence, by making some of the major projects economically viable, the drop in breakeven prices is expected to drive the Norwegian oil and gas market during the forecast period.
The Norwegian oil and gas market is moderately fragmented due to many companies operating in the industry. The key players in this market include Equinor ASA, Aker BP ASA, Total SA, Royal Dutch Shell PLC, and Exxon Mobil Corporation.
Reasons to Purchase this report:
- The market estimate (ME) sheet in Excel format
- 3 months of analyst support