Norway signals measures to cut oil-industry costs in late 2014
BY MIKAEL HOLTER
OSLO, Norway (Bloomberg) -- Norway, western Europe’s biggest oil and gas producer, may present new measures to reduce costs in its offshore industry toward the end of next year.
The government will look at “procedures and regulatory measures” that will involve the petroleum and energy, labor and environment ministries to contain costs that are inhibiting output, Minister of Petroleum and Energy Tord Lien said in an interview in Oslo. Working out the measures would take “a significant part” of next year.
Costs in Norway’s offshore industry have risen 10 percent a year on average from 2003 to 2012, according to consultants Rystad Energy AS. The country’s crude production has dropped to less than half from a 2000 peak as reserves from aging North Sea fields dwindle.
“If the trend continues, it will become challenging to produce more, or just produce as much” as now, Lien said today.
It’s critical to invest in producing fields to raise recovery rates before they’re shut down, Lien said at a conference in Oslo. Challenges also include making new projects in mature areas of the North Sea profitable and reducing costs for exploration and production in harsh-weather areas in the Arctic, Lien said.
The main responsibility of reducing costs lies with the industry itself, Lien said last week.
“The key to maintain activity on the Norwegian shelf lies in a large part in continued technology development,” Lien said. While his government, which took office in October, has increased grants to petroleum research, he wouldn’t provide a target for how much authorities plan to spend in the future.