Norwegian oil companies increase investment plans for 2022

General view of Equinor’s Johan Sverdrup oil platforms in the North Sea, Norway December 3, 2019. REUTERS/Ints Kalnins

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OSLO, Feb 17 (Reuters) – Norwegian oil and gas companies plan to invest nearly $18 billion this year, more than originally planned, as they take advantage of pandemic-era tax incentives, an expert revealed on Thursday. National Statistics Bureau (SSB) survey.

The forecast is sure to draw criticism from environmentalists, who argue that companies should limit their spending on fossil fuels to curb global warming.

Norway, one of the world’s wealthiest countries per capita, is also investing heavily in cleaner energy, but says it should continue to produce fossil fuels as long as there is global demand.

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The SSB survey showed that Norway’s largest business sector now plans to invest 159.5 billion crowns ($17.9 billion) in 2022, up from 154.4 billion crowns in November. Read more

That would still be an estimated 8.1% drop from 2021.

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SSB said its provisional estimate called for a further drop to 131.4 billion crowns in 2023, but that is expected to change.

“If expected project schedules are maintained, field development investment in 2023 will be significantly higher than what is currently included in the survey,” the agency said.

Projects yet to be approved include a cluster of oil and gas discoveries in the so-called NOAKA area by Aker BP and Equinor (EQNR.OL), as well as Equinor’s Arctic Wisting oil discovery.

The companies estimate investments in the two projects alone at a total of up to 165 billion crowns. Read more

Investments in 2021 totaled 177.7 billion crowns, down 0.9% from 2020, SSB said.

Oil investments affect the short-term growth of the Norwegian economy, as supplier industries benefit from higher orders, as well as longer-term oil production, which is expected to increase by 9% by 2024.

In 2020, the Norwegian parliament approved temporary tax incentives to support oil and gas investments amid falling oil demand due to the pandemic.

The incentives are due to end this year and companies must approve new projects before this deadline to benefit from them.

Meanwhile, demand rebounded as pandemic-related restrictions eased. Boosted by geopolitical tensions, gas prices in Europe have reached record highs and the price of oil has reached its highest level since 2014.

($1 = 8.8984 Norwegian kroner)

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Reporting by Nerijus Adomaitis Editing by Terje Solsvik and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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