Norway oil investment set for record high

Norway's oil and gas sector investments could hit a record in 2012 as companies take advantage of high oil prices and upgrade ageing infrastructure but the lack of rig availability could constrain exploration.
“Investment spending could hit 184.6 bn crowns ($ 32.00 bn) in 2012, an increase of 7 % from a September estimate and well above the 175 bn crown projection by the Norwegian Oil Industry Association,” Statistics Norway said.
"There are at least 25 major projects in the next 5 to 6 years, so investment is pretty high, maybe even extremely high," said Magnus Smistad, an oil sector analyst.

Norway, the world's seventh-largest oil exporter and the second largest natural gas exporter, generates a fifth of its GDP and half of its exports from its oil and gas sector.
Oil output has been falling steadily for years but investments have been high as companies upgrade ageing infrastructure to increase recovery rates, taking advantage of high oil prices.
"The combination of persistent high oil prices and many mature fields on the Norwegian Shelf forms the backdrop for the expected high investment level in 2012. Production in many fields is falling, and many platforms are old. These facts necessitate upgrading on a large scale," said Statistics Norway.
But the agency warned that exploration activity could be constrained going forward as a shortage of rigs restricts exploration plans.
"This is definitely an issue because you see a lot of delays and the lack of rigs that meet the North Sea requirements could cause further delays. But this is a side issue really, we're talking about delays of a quarter or so," Smistad added.

Still, exploration investments is seen rising to 32.4 bn crowns next year, an 11 % increase from 2011, the statistics agency added.
The data indicate that exploration investments in the area have nearly doubled since 2007.
The Norwegian Oil Industry Association earlier predicted that investments in the sector would rise through 2014, before a drop.

The Aldous/Avaldsnes discovery, possibly the third-biggest find ever made off Norway, could push up investment expenditure beyond 2016, experts said. Smistad estimated development costs at the field at 60 bn crown, a figure large enough to make a noticeable impact on the overall investment spending.
“Test drilling in the Aldous Major South field showed it contains 900 mm to 1.5 bn barrels of recoverable oil equivalent, above the earlier 400 mm to 800 mm barrel estimate,” said Statoil.
Exploration could get another boost later this decade as Norway prepares to unlock offshore Arctic oil and gas resources and open the area up for exploration.