Lower income and higher expenses for the extraction industries

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It comes as no surprise that the production value of the Norwegian oil and gas industry falls after the high point in 2018. Lower oil and gas prices, combined with lower production volume, are joined by higher intermediate consumption as value added falls dramatically in 2019.

Preliminary figures for extraction and related services show a decrease in production value of 18,5 per cent, from 786 billion in 2018 to 641 billion in 2019. The decrease comes as a result of lower oil and gas prices compared to last year, while the production volume continues to decline.

Figure 1. Value of production, intermediate consumption and value added. Total for the oil and gas industries

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Intermediate consumption 26.099 27.592 31.87 30.103 28.437 34.019 33.633 38.824 40.557 34.933585 42.115952 52.570593 57.922229 59.16016 66.696745 81.435253 97.93932733 116.232113 140.402596 144.111294 150.715219 132.988 157.867188 149.533 140.237 120.477 104.191 123.567 135.037
Value added 99.559 99.819 109.484 114.789 121.971 167.408 183.79 133.767 180.553 348.574276 331.416097 291.669933 306.826542 369.211246 479.526851 564.521782 512.124477 658.397979 481.644639 525.9819535 640.483157 689.148504 650.094278 637.707 523.529 428.206 525.219 662.789 505.836
Value of production 125.658 127.411 141.354 144.892 150.408 201.427 217.423 172.591 221.11 383.507861 373.532049 344.240526 364.748771 428.371406 546.223596 645.957035 610.0638043 774.630092 617.225256 670.0932475 791.198376 811.393 807.963 787.236 663.736 548.682 629.409 786.356 640.872

Intermediate consumption has fallen every year from 2013-2017 before increasing in 2018. This trend continues as intermediate consumption increases by 9,3 per cent, from 124 billion in 2018 to 135 billion in 2019. As a result, value added falls even more. With ever lower production volumes, and uncertain future oil and gas prices, it will be important for companies to control intermediate consumption going forward.

Figure 2. Value added, by industry

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Extraction of oil and natural gas, incl. transport via pipelines 99.56 99.82 107.52 112.64 119.37 163.74 177.56 126.21 171.96 342.16 322.31 279.73 295.86 359.29 465.22 546.65 491.69 633.14 441.89 486.93 600.98 648.08 600.91 587.25 473.64 389.63 493.173 636.973 467.395
Support activities for petroleum and natural gas extraction 0.00 0.00 1.96 2.15 2.61 3.67 6.23 7.56 8.60 6.41 9.11 11.94 10.96 9.92 14.31 17.88 20.43 25.26 39.75 39.05 39.51 41.07 49.43 50.46 49.89 38.57 32.046 32.817 38.441

Positive developments for the support industries

Value added is much higher in the extraction industries, which drives the overall decrease. The support industries increase value added by 34,7 per cent, from 29 billion in 2018 to 38 billion in 2019. Production value for the support industries has increased by 19,9 per cent, and intermediate consumption by 14,2 per cent.

Employment in the two extraction industries remains stable, while it increases by 10,1 per cent in the support industries. The support industries now account for 58,2 per cent of total employment for the three areas extraction, transportation via pipelines and support activities.

Figure 3. Employment, by industry

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Extraction of oil and natural gas, incl. transport via pipelines 15830 16119 17338 16878 16498 16185 16183 15865 15998 15154 15079 16450 17396 17119 16780 18276 18675 20150 21433 21930 23869 25625 27159 27258 26470 25357 23840 23814 23821
Support activities for petroleum and natural gas extraction 0 0 4173 4603 4437 5517 7280 8080 9082 7743 9786 12358 12569 12357 11841 13470 15697 17819 26523 26828 30754 31421 35676 36814 33282 29182 25485 29860 33154

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