Norway Expects High Investment Levels Into Shelf Oil and Gas Despite Green Push

Despite plans for a green energy transition and promises of emission cuts, Norway, Europe's second-largest oil and gas producer, plans to extract oil and gas until 2050 and beyond, and is expecting the output to drop naturally.

After a slight decline in 2022, mostly as an echo of the COVID-19 pandemic, investments on the Norwegian shelf will increase up to 2026, the industry organisation Norwegian Oil and Gas has said in a forecast.

Total investments for 2022 are estimated at NOK 174 billion ($19.3 billion), which corresponds to a decrease of 6 percent from 2021 to 2022 if measured in fixed prices, the organisation stated in a press release.

However, from 2023 onwards, Norwegian Oil and Gas expects investments to soar again. From 2022 to 2025, Norwegian Oil and Gas believes investments will increase to NOK 192 billion ($21.3 billion).

“This year’s investment analysis gives reason for optimism. From 2022 to 2025, we expect a moderate increase in the level of investment on the Norwegian shelf”, Norwegian Oil and Gas chief economist Ellen Bakken said, as quoted by the newspaper Nettavisen.

Many looked gloomily at the future of the Norwegian shelf when the COVID-19 pandemic in the spring of 2020 sent oil prices downward to levels few in the industry have seen before. A previous study by analysts at Rystad Energy showed that investments in Norwegian oil exploration could have been halved by 2022 compared to 2019.

However, according to Bakken, the package of relief measures for the oil industry that the previous Norwegian government adopted in 2020 proved critics wrong and is now showing results.

“The investment estimate for 2022 indicates approximately the same investment level for 2022 as we expected before the pandemic. This shows that the package of measures has worked as intended”, Bakken said.

While envisaging a green energy transition and promising emission cuts and major investments in hydrogen and offshore wind, Norway, Europe's second largest oil and gas producer, plans to extract oil and gas until 2050 and beyond, according to a long-term strategy presented by the former liberal-conservative government earlier this year.

Among others, regular licensing rounds will be held, while exploration acreage will be offered to energy firms, the government said then, expecting the extraction of oil and gas, which made Norway one of the world's most opulent nations, to naturally decline by 65 percent by 2050.

Despite pressure from like-minded left-wing parties, Labour, the winners of the recent general election in September, acknowledges the importance of oil and gas for the national economy and local communities and is a firm believer in its further development.