NORWEGIAN OIL WILL DOWN
Oil companies in Norway, Western Europe's largest oil exporter, expect to slash spending for the third consecutive year in 2017 as they continue to downsize, delay projects and cut costs, an official survey showed Thursday.
Oil companies operating in Norway expect to spend 153.2 billion kroner ($18.47 billion) on exploration and production next year, the weakest figure since 2011 and nearly a third below the sector's all-time high of NOK220.7 billion two years ago. In 2016, they expect to spend NOK165.9 billion on exploration and production, down from NOK195.4 billion a year earlier and 1% below a similar estimate made in February.
Lower oil-sector spending is set to damp the Nordic country's growth, as oil and gas constitute nearly a fifth of its gross domestic product and nearly 40% of its export revenue.
Although the Brent oil price picked up to $50 a barrel on Thursday, from below $30 a barrel in January, it remains more than 50% cheaper than two years ago, and the global oil sector is delaying projects and slashing jobs to reduce costs.
The spending estimate was roughly in line with what analysts had expected. DNB Markets had forecast spending would drop to around NOK155 billion next year, and Nordea Markets had the figure at NOK151 billion.
The Norwegian Oil and Gas Association said in a report last year that it expected oil-sector spending to bottom out at NOK132 billion in 2017 and start to pick up in 2018.
Norway's oil sector increased spending by 73% between 2010 and 2014, as high and stable oil prices enabled companies to develop projects previously seen as unprofitable, but capacity constraints in the global oil-field services industry fueled costs to unprecedented levels.
Norway produced 3.92 million barrels of oil equivalent a day in 2015, up slightly on the prior year but 14% below the peak a decade earlier.
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