Upward revision of investment estimates

Investments in oil and gas extraction and pipeline transport for 1999 are estimated at NOK 71.5 billion according to the investment survey conducted in the second quarter of this year. This is NOK 4.3 billion lower than the same estimate for 1998. Compared with this year's first quarter estimate, the 1999 estimate has been adjusted upwards by NOK 9.3 billion. Investments in field development and fields on stream show the largest adjustments.

The initial estimate now obtained for the year 2000 is NOK 47 billion, NOK 5 billion less than the same initial estimate for 1999 issued in second quarter 1998, and fully NOK 24.5 billion lower than the estimate for 1999 issued in second quarter 1999. The decline is due to lower investments in exploration, shore operations and pipeline transport systems. The estimates for 1999 and 2000 given here indicate that companies are cutting costs wherever they can (exploration and shore operations) while investments which to a certain degree are tied to field development and fields on stream have been maintained.

Record-high investments in fields on stream

Companies are now reporting investments in fields on stream in 1999 will total NOK 19.7 billion. This is the highest estimate ever registered. Heidrun, Statfjord, Oseberg and Troll are the main contributors. The estimate is fully NOK 5.2 billion higher than the similar estimate for 1998. The estimate is also an upward revision of NOK 2.9 billion compared with the previous quarter.

For field development the estimate for 1999 is NOK 2.9 billion lower compared with the estimate for 1998 from the same quarter last year. The reason for the decline is that a number of fields have come on stream over the past year. This applies to Varg, Visund, Åsgard A and the Gullfaks satellites Rimfaks, Gullveig and Gullfaks Sør. The estimate is furthermore NOK 14.4 billion higher than the estimate for 1999 issued in second quarter 1999, and all of NOK 3.3 billion higher than the estimate for 1999 released during the previous quarter.

The new exploration investment estimate is now NOK 5.4 billion, a decline of NOK 3.3 billion compared with the same estimate for 1998. Although the price of oil has bounced back some after remaining low for some time, the improvement has yet to show up in higher investments in exploration. The estimate for 1999 from the previous quarter was NOK 5.2 billion, up a modest NOK 0.2 billion compared with the previous quarter.

Investments in pipeline transport systems are now estimated at NOK 6.6 billion in 1999 thanks largely to the Europipe II and Åsgard transport systems. The figure is, however, NOK 2.8 billion lower than similar estimates for 1998, but is NOK 2.0 billion higher than the estimate for 1999 from the previous quarter. The estimate for shore operations is NOK 0.5 billion lower than the estimate issued in second quarter 1998 for 1998 and is now NOK 4.1 billion.

Estimate for 2000

The initial estimate for 2000 is NOK 47 billion for the overall investments in oil and gas extraction and pipeline transport. This is NOK 5 billion less than the estimate for 1999 given in second quarter 1998, and fully NOK 24.5 billion lower than the estimate for 1999 given here. If we compare it with the estimate for 1999 issued in second quarter 1998, we see that the decline is considerable with respect to exploration. Pipeline transport systems and shore operations also show a small decline.

Exploration investments in 2000 are estimated at NOK 4.3 billion, all of NOK 5.3 billion lower than the estimate for 1999 given in second quarter 1998. It should be added here that certain companies are working on their budgets for 2000, so the current estimate is therefore uncertain.

With respect to field development, the estimate for 2000 is NOK 22.2 billion.
This is NOK 1.0 billion lower than the estimate for 1999 given in second quarter 1998, and fully NOK 13.4 billion lower than the estimate for 1999 given here. This is because a number of fields have been completed or are expected to be completed in the course of 1999. This applies to Åsgard A (came on stream 19 May 1999), Jotun, Balder, Visund (came on stream 21 April 1999), Oseberg Øst (came on stream 3 May 1999), Troll C and Eldfisk.

This is also reflected in fields on stream, where investments in new fields are contributing to higher spending. The figure for 2000 is NOK 17.8 billion, NOK 2.4 billion higher than the estimate for 1999 given in second quarter 1998.

The estimate for investments in pipeline transport systems in 2000 is NOK 1.6 billion. This is NOK 1.4 billion lower than the estimate for 1999 given in second quarter 1998, and fully NOK 5.0 billion lower than the estimate for 1999 given here. The reason for this is that smaller investments are expected in Europipe II when the project is completed in the autumn of 1999. Similar lower investments in shore operations are because investments in the Kårstø facility are expected to be smaller in 2000 than in 1999.

New Statistics
Investment statistics. Oil activities, 2nd quarter, 1999.
The statistics are published quarterly in the Weekly Bulletin of Statistics. For more information contact: Nils.Anders.Nordlien@ssb.no, tel. +47 21 09 47 67.

Weekly Bulletin issue no. 22, 1999