The field development investment area accounts for almost the entire increase in the estimate. Development projects are only included in the investment survey when a plan for development and operation (PDO) is submitted to the authorities. PDOs were delivered for a total of 16 projects late in November and in December. These have therefore now been included in the survey. The investment estimate for 2023 now indicates a growth of 18 percent compared to the corresponding estimate for 2022, given a year ago, the statistics oil and gas, manufacturing, mining and quarrying and electricity supply show.
The growth indicated for 2023 should be interpreted with caution, since very few new development projects are expected beyond those currently included in the count and which will have accrued investments this year. There is therefore reason to believe that the estimated development for 2023 in the next measurements will be far flatter than was the case for the estimated development for last year (see figure 2 below). In this sense, it may be more appropriate in this particular case to compare the current 2023 estimate with the final investments in 2022. With this as a starting point, the indicated ongoing growth this year will be 6.3 per cent.
Total accrued investments in oil and gas extraction and pipeline transport for 2022 amounted to NOK 176.8 billion, which is 0,5 per cent lower than final investments in 2021. The final investments in 2022 were 0.9 per cent higher than estimated in the previous survey.
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.
High initial estimates for 2024
The investments in oil and gas extraction and pipeline transport for 2024 are estimated at NOK 178.6 billion. This is as much as 36 per cent higher than the estimate given for 2023 in 1st quarter 2022.
Almost all of the indicated growth is driven by the fact that the estimate for field development is more than twice as high as the corresponding estimate for 2023, given a year ago. Development projects are only included in the investment survey when a plan for development and operation (PDO) is submitted to the authorities. In the Norwegian parlament's tax measures package, which was adopted in June 2020 to remedy the industry in connection with the sharp drop in oil prices early in the corona pandemic, favorable taxation is provided for all developments for which PDO is delivered before the end of last year. This is the reason why a great many PDOs were delivered last year, most of them towards the end of the year. The far higher initial estimate for 2024 now than in the corresponding estimate for 2023 a year ago is largely due to the fact that these PDOs were not included in the count a year ago, but are included in the count now. As figure 2 above shows, the estimate for 2023 has increased a lot since the initial estimate given a year ago. Since few new projects are expected to be delivered in the next couple of years, it is unlikely that the estimates for 2024 will increase to the same extent as the estimates for 2023 have done in the past year. Therefore, the indicated growth now estimated for 2024 should be interpreted with caution.
The initial estimates for fields on stream and exploration are both only marginally higher than the corresponding estimates for 2023. The estimates also indicate a strong rise for the categories pipeline transportation and shutdown and removal in 2024, but since these categories initially have low investment levels, they only contribute modestly to the increase estimated for the investments in total. It is only the estimate for onshore activities that has a lower estimate for 2024 and which therefore contributes to pulling the total estimate down somewhat.
Strong jump in the estimate for 2023
Total investments in oil and gas activity in 2023, including pipeline transportation, are estimated at NOK 187.8 billion. This is NOK 38 billion more than estimated in the previous quarter. The increase comes mainly as a result of the many new development projects that have come about since the last survey. In addition, estimates have increased for some of the field developments that were already included in the previous count. Estimates for the other investment areas have also increased somewhat, except for pipeline transportation, which is unchanged, and onshore activities, which have fallen from the previous measurement.
The sharp upward adjustment in the estimate for investments in oil and gas activity, including pipeline transportation now indicates a growth of 18 per cent in 2023. As figure 2 above shows, the estimates for 2022 have increased a lot in the last years measurements, not least as a result of the many new developments throughout the last year. As mentioned above, there are not many new developments expected in the next year, therefore it is likely that the further estimated development for 2023 will be flatter than the corresponding estimate development for 2022. If so, the investment growth in 2023 will be lower than indicated in this survey.
As Figure 3 shows, the indicated increase for 2023 is driven by a sharp increase in field development. The other categories overall have a negative contribution. Fields on stream, onshore activities and pipeline transportation also contribute slightly to higher investments, while exploration as well as shutdowns and removals contribute to dampening growth in 2023.
Marginal investment decline in 2022
Total investments in oil and gas extraction and pipeline transport for 2022 were NOK 176.8 billion. This is 0.9 per cent higher than estimated in November last year. This is the first time since 2005 that final investments have ended up higher than the last estimate given in November of the statistical year. It is particularly higher than estimated investments in field development that contribute to this. Investments carried out in the 4th quarter on the 16 new projects came as a pure addition, since there were no estimates for these in the previous survey. In addition, several of the already ongoing developments have had higher investments in the 4th quarter than what was estimated in November. Investments made also ended up higher than forecast in November for the categories fields on stream and pipeline transportation, while the remaining categories had lower investments than forecasted in November.
Measured in current prices, the final investments in 2022 are 0.5 per cent lower than in 2021. The decline was driven by lower investments in shutdown and removal and somewhat lower investments in field development and fields on stream, while the remaining investment categories had higher investments in 2022 and thereby helping to moderate the fall.
Investments in fields on stream came to NOK 75 billion in 2022. This is 0.4 per cent lower than in 2021. Although the development in investments in fields on stream overall was stable from 2021 to 2022, there were major changes in the subcategories. While the commodities and services sub-categories increased by 22 per cent overall, investments in production drilling fell by 10 per cent in 2022. These various developments may be related to the previously mentioned oil tax package. It was designed so that all types of investment, apart from shutdown and removal, carried out in 2020 and 2021 were covered by the favorable tax rules. In addition, investments in all new and amended PDOs delivered before the end of 2022 should be tax-advantaged. Particularly favorable tax rules in 2021 contributed to high operating investments this year. Activity in production drilling was particularly high, which is an activity that requires shorter planning time than other types of activity that increase future production capacity. The decline in investments in production drilling in 2022 can be seen in the context of the fact that the favorable tax rules were phased out for large parts of this activity this year. The strong rise in commodities and services within fields on stream can be linked to the fact that part of this activity is covered by smaller developments within existing fields for which PDO has been delivered or where existing PDO has been changed, so that the favorable tax rules still apply, also in 2022.
Record high activity within concept studies in 2022
Investment expenditure for exploration and concept studies ended at NOK 28.4 billion in 2022, which is 4 per cent more than the previous year. The concept studies subcategory had investments of as much as NOK 6.3 billion, which represents growth of 185 per cent from 2021, which was also a year of unusually high investment activity in this category. The field evaluation subcategory, on the other hand, had 76 per cent lower investments in 2022 than in the previous year. The strong activity changes with opposite sign on these cost types are directly related to the large accumulation of new development projects for which PDO was delivered late in 2022. These cost types include planning activity for new developments, i.e. activity related to maturing discoveries for development and operation. Field evaluation includes evaluation and planning activity in the first phase after a discovery has been made, while concept studies include the later planning activity linked to the development concept itself. This explains why there was a clear decrease in field evaluation and at the same time a strong increase in concept studies in 2022.
NOK 14.5 billion was spent on exploration drilling in 2022, which is 7.7 per cent more than in 2021. According to the Norwegian Petroleum Directorate, 34 exploration wells were started in 2022, 6 less than the year before. Of last year's wells, 29 were exploration wells and 5 appraisal wells. Eleven new discoveries were made during the year.
Clearly higher investments in the 4th quarter
The final investments in the 4th quarter came to NOK 48.8 billion. This is 3.3 per cent higher than estimated in the previous quarter, and 12 per cent higher than the investments in the 3rd quarter, unadjusted. The seasonally adjusted increase from the 3rd quarter to 4th quarter was 8.1 per cent. The rise from the 3rd to the 4th quarter came mainly within field development, while there was lower activity within exploration and shutdown and removal in the 4th quarter.