Norway oil companies face higher investment costs due inflation

Norwegian oil and gas companies plan to invest more in 2023 and 2024 than previously thought as inflation drives up the cost of field developments, a national statistics office (SSB) survey showed on Thursday.

The country’s biggest business sector now expects to invest 216 billion Norwegian crowns ($19.94 billion) in 2023, up from a forecast of 213 billion made in August, SSB said.

Oil companies now plan to invest 232 billion crowns in 2024, compared to a previous estimate of 207 billion.

“The higher estimate is mainly due to significant higher reported cost estimates on some development projects,” SSB said in a statement.

“These increased costs will probably not contribute much to expanded production capacity more than initially planned,” it added.

So far this year, there was only one plan for a new field development submitted, after plans for more than 16 projects had been submitted in 2022 to take advantage of tax incentives.

In September, Equinor submitted a 4 billion-crown plan for development and operations (PDO) for its Eirin gas discovery in the North Sea.

Development projects are only included in the investment survey when a PDO is submitted to authorities.

SSB said weakening of the Norwegian crown against the U.S. dollar and the euro reinforced the already high cost inflation as measured in crowns.

($1 = 10.8304 Norwegian crowns)

Norway oil companies face higher investment costs due inflation