Norway Urges Investors to Take Long-Term View for NCS Oil and Gas

The Norwegian Petroleum Directorate (NPD) has urged investors to take a long-term view of Norway's oil and gas prospects, despite the challenging market seen since 2014.

In its annual review of the the Norwegian Continental Shelf, published on January 14, the NPD said that the prospects for the Norwegian oil and gas industry were positive with activity to remain high for years to come.

"We see a tendency for the companies to prioritise short-term earnings rather than long-term value creation," the government agency's director, Bente Nyland, said.

Nyland stressed that a longer view would benefit companies more than a short-term one.

"Activity will remain high in the years to come, in spite of the decline since 2014," Nyland said in the statement. "Therefore, it is important that the companies make wise decisions and keep a long-term perspective."

The NPD estimates that there is still a massive amount of resources on the Norwegian Continental Shelf yet to be exploited, putting the figure at about 50%. The agency is concerned that, because of low oil prices, measures to produce those resources will not be taken and the hydrocarbons will remain in the ground.

However, despite those concerns, the NPD saw many positive developments for for the Norwegian Continental Shelf in 2015, with a record number of wells drilled, including exploration wells, which numbered 56. The agency also pointed to the higher number of fields in operation in 2015 as compared to a decade before. At the end of 2015, 82 fields were in operation compared to 51 in operation 10 years before. 

Investments have also been steadily declining in the Norwegian hydrocarbon sector. Investments hit record levels in 2013 and 2014, by about 16%. The total of investments made in 2015 was just under NKr150bn (about €15.5bn). The NPD expects the level of investments to keep declining until 2018, with a moderate increase projected after 2019.