The increase in estimates is mainly driven by higher cost estimates in production drilling within fields on stream. The oil companies' investment estimates for this year are also 21 per cent higher than the corresponding estimate for 2023, given in 3rd quarter of 2023, the statistics oil and gas, manufacturing, mining and quarrying and electricity supply show.
The investments in 2025 are now estimated to be NOK 240 billion, which is 11 per cent more than estimated in the previous survey in May. The upward adjustment is largely driven by higher estimates within the categories fields on stream and field development. The updated estimate for 2025 indicates a growth in nominal value of 16 per cent compared with the corresponding estimate for 2024, given a year ago.
Quarterly investment statistics for oil and gas extraction and pipeline transport are included in the survey Investments in oil and gas, manufacturing, mining and electricity supply. For more details about total investments, please see the following article.
Upwardly revised estimate for 2024
The investments in oil and gas extraction and pipeline transport for 2024 are now estimated at NOK 257 billion, which is historically the highest nominal estimate given since this statistic was created. The estimate is 4.1 per cent higher than in the previous survey.
The estimate is also 21 per cent higher than the corresponding estimate for 2023, given in 3rd quarter last year. In the previous poll, a percentage growth of as much as 25 percent was indicated. As Figure 2 above shows, the estimate for 2023 increased a year ago more than is the case for 2024 now.
As figure 3 above shows, all main categories contribute to the indicated increase from 2023 to 2024, but it is the estimates for field development that contribute the most. The many field developments that started towards the end of 2022 are now in their second full year. Activity on field developments increases sharply during the first years and often reaches a peak in the second or third year of the development. This is the reason why growth in this category of 18 per cent is now indicated. In addition, the estimates for fields on stream and exploration also contribute significantly to the indicated growth from 2023 to 2024. A sharp increase is also indicated for the categories pipeline transportation and shutdown and removal next year, but since these categories initially have low investment levels, they only contribute to a modest extent to the estimated increase for total investments.
Estimate jump for 2025
Total investments in oil and gas activity in 2025, including pipeline transportation, are estimated at NOK 240 billion. This is NOK 24 billion more than estimated in the previous quarter. The increase from the previous measurement comes within fields on stream, field development, pipeline transportation and shutdown and removal. Exploration and onshore activities are moving in the opposite direction and are contributing to curbing the increase in estimates.
The investment estimate for production drilling in fields on stream has increased by as much as 24 per cent. Several drilling plans in connection with the budget update this summer may have been triggered by persistently high oil prices.
The higher estimate for field development is related to the fact that significantly higher costs have now been reported for some development projects than the operators had previously estimated. There have been no new development projects, so the whole increase will come on already existing developments. These are additional investments that are unlikely to contribute to significantly expanding future production capacity beyond what was previously planned. This is probably due to the fact that the construction requires more investment work than previously assumed. Some of the increase in the projections for most categories may be related to the depreciation of the Norwegian krone against the dollar and the euro in recent months, which has contributed to the expected rise in prices for investments made abroad and imported capital goods, which has increased oil companies' investment budgets.
The estimate for investments in pipeline transportation and extraction of oil and gas for 2025 is now 16 per cent higher than the corresponding estimate for 2024, given in the 3rd quarter of last year. The previous measurement gave indications of a growth of 19 per cent this year.
As figure 4 above shows, all main categories contribute to the indicated increase from 2024 to 2025, but higher estimates in fields on stream are mainly driving the indicated growth.
Investment growth in the 2nd quarter
The final investments in the 2nd quarter came to NOK 63.7 billion. This is 5.5 per cent lower than estimated in the previous measurement, and 15.1 per cent higher than the investments in the 1st quarter, unadjusted. The seasonally adjusted growth from the 1st to the 2nd quarter was only 2.9 per cent. The reason why the seasonally adjusted investment growth is clearly lower than the unadjusted growth is that investment tends to be higher in the 2nd quarter than in the 1st quarter. The increase in 2nd quarter was mainly driven by an increase in fields in operation and exploration. Investments carried out in 2nd quarter were nominally 24.4 per cent higher than in the same quarter last year. Higher investments in field development and exploration contributed most to the growth from the corresponding quarter last year.
The forecast for 2024 assumes strong growth in the second half of the year
Investments in the first half of this year are 23 per cent higher than investments made in the first half of 2023. Based on this, one is slightly ahead of schedule in relation to the current estimate for 2024 indicating a growth of 21 percent. With investments of NOK 119 billion in the first half of the year, investments of NOK 138 billion are assumed in the second half of the year, in order for the current estimate for 2024 to be realised. In that case, this will represent an increase of about 16 per cent from the 1st to the 2nd half of the year. Last year, the growth from the 1st to the 2nd half of the year was as much as 23 per cent. Much of the increase then was driven by the fact that activity from the many developments that started up around the same time at the end of 2022 was greatly stepped up through 2023.
The increase for the second half of this year is mainly driven by increased planned activity in fields on stream, including production drilling, which is a type of activity that can more easily be decided to be shifted compared to investment activity in field development, where the entire field's future production is entirely dependent on the completion of the field development. High oil prices nevertheless provide strong incentives to implement plans for higher activity in production drilling, which is the type of investment activity that generates higher production most quickly. Historical figures from the statistics show that the estimated investment measurement in August of the statistical year has been on average about 3.3 per cent higher than the final investment figures for the last 20 years. In the last two years, however, the final figures have been higher than the estimate from the August survey. It is therefore within the scope of opportunity that the investments now estimated for 2024 can be realised.