Spillover-effects from the offshore petroleum to the mainland economy

This report studies in detail how the activity in various industries in the Norwegian economy is directly affected by demand from the petroleum industry through their supply of goods and services to the petroleum industry. There are two types of deliveries that are identified:

1. Direct deliveries from various Norwegian industries to the petroleum industry, as well as imports to the petroleum industry, in the form of capital goods and intermediate consumption. This is the industry's production supplied directly to the petroleum industry.

2. The sum of direct and indirect deliveries from various Norwegian industries to the petroleum industry in terms of gross product (value added) in the industries and the associated employment.

This analysis does not only consider only the direct deliveries, but also the sum of direct and indirect deliveries. An input-output model based on figures from the Norwegian national accounts is used to quantify deliveries to the petroleum industry. We calculate the share of the value added in each industry that can be linked to deliveries to the petroleum industry, and how large this is as a share of the petroleum industry's total demand.

Based on input-output calculations, we can also estimate that in 2014, directly and indirectly, there were about 240 000 employed persons which may be linked to the activity in the petroleum industry. Eika et al (2010) estimated the number of direct and indirect employment related to petroleum activities to 186 000 people in 2006. The oil activities’ share of total employment was about 8.7 per cent in 2014, while it was 7.7 per cent in 2006 when service activities incidental to oil and gas countedas part of the petroleum industry.

Deliveries to the petroleum industry come from many parts of the Norwegian businesses. When also taking into account the indirect deliveries in the form of intermediate consumption, we see that this applies to a wide range of industries in the Norwegian economy. It is the service industries that have the greatest proportion of deliveries to the petroleum industry’s purchases of investment products. The service industries deliver 40.9 per cent of the investment products, of which 9.0 percentage points is delivered by service activities incidental to oil and gas, while manufacturing industry accounts for 12.7 per cent of the deliveries, 38.8 per cent of the investments in the petroleum industry are imported from abroad.

Purchases of goods and services used as inputs in the production are called intermediate consumption. The service industries cover 42.8 per cent of the deliveries to intermediate consumption in the petroleum industry, while manufacturing industry delivers 9.5 per cent. 33.4 per cent of the total intermediate consumption in the petroleum industry is imported, when we take into account both the direct and indirect deliveries.

Our study attempts to identify the actual deliveries related to the petroleum industry. This is not the same as the impact of the petroleum industry. Effects from the households and governments additional income from the petroleum industry are not analyzed. Effects related to the activity in the supplier industries on the labor market and the price formation, are also omitted from the analysis. Without demand from the petroleum industry the supplier industries would to some extent been able to shift towards other markets, while other industries would have room for expansion.