Total investment for 2022 is estimated at NOK 174 billion, down by six per cent from 2021 measured in fixed prices. Spending is expected to increase again from 2023.

“This year’s investment analysis gives grounds for optimism,” says chief economist Ellen Bakken at Norwegian Oil and Gas. “We expect a moderate increase in NCS investment from 2022 to 2025. That gives jobs nationwide and big revenues for society, which will also be important for financing the green shift we’ll be going through.”

The petroleum industry was strongly affected in the spring of 2020 when the pandemic hit Norway and oil prices plunged. A study by Rystad Energy showed that investment up to 2022 could have almost halved from the 2019 level. Great uncertainty prevailed, with jobs under threat nationwide. A large majority of the Storting (parliament) voted for the package of measures designed to avert a deep crisis in the oil industry.

“We’re now seeing the results of the temporary tax changes,” says Bakken. “Our estimate for 2022 indicates roughly the same level of investment as we predicted before the pandemic. This shows the measures have functioned as intended. Jobs and projects are secured.”

Norwegian Oil and Gas expects investment in 2022-25 to rise from NOK 174 billion to NOK 192 billion. This is because a number of projects are expected to be sanctioned by the end of next year, as has also been communicated in several other analyses presented in 2021, including those from Statistics Norway, Rystad Energy and Norges Bank.

“Our analysis shows that the industry has faith in the future, and that it’ll continue to play an important role for Norwegian value creation,” observes Bakken. “We see that projects also get removed from company investment plans. Companies are setting tough priorities, evaluating their portfolios continuously and basing all projects on high required rates of return.”

In its investment analyses for previous years, Norwegian Oil and Gas has emphasised that a number of projects which were at an early planning stage could be realised without being included in its estimates at that time. That could raise investment further along the five-year period. A look back at previous analyses shows that this expectation has been correct.

“This year’s analysis shows a decline to NOK 155 billion in 2026,” says Bakken. “Because that’s some way off, however, the figure could be higher. If we achieve a stable supply of attractive acreage, explore and find more resources, the level of investment could also be maintained in the longer term.”