Page 17 - Euroil Week 43 2020

EurOil PERFORMANCE EurOil

Norwegian exploration drilling to

slump to 14-year low in 2020

NORWAY OIL and gas exploration in Norway has dropped pace across the entire shelf, particularly in
sharply this year, amid spending cuts by opera- areas where the infrastructure has a limited
Only 30 exploration tors in response to the coronavirus (COVID-19) lifetime,” the NPD said. “Without new discov-
wells will be drilled in pandemic and the resulting collapse in prices. eries, oil and gas production could decline rap-
2020, compared with a Oil firms are expected to drill only 30 explo- idly after 2030.”
pre-pandemic forecast ration wells off Norway in 2020, the Norwegian Norway also continues to award new areas
of 50. Petroleum Directorate (NPD) has said, marking for development. In late September the NPD
a 14-year low and comparing with 57 wells in revealed that the country’s latest Awards in
2019. Prior to the pandemic, the regulator had Predefined Areas (APA) licensing round had
projected 50 wells this year, before slashing the attracted bids from 33 companies. Awards will
count to 40 in April. be announced in early 2021, with all the blocks
“The decline in demand for oil and lower on offer located in the Norwegian Sea.
prices have led oil companies to reduce their The NPD estimates that there are still 3.9bn
exploration budgets for the year and postpone cubic metres or 24.5bn barrels of oil equivalent
a number of exploration wells,” the NPD said in (boe) left to be found, down from 4 bcm two
a statement. years ago. Some 25% of total estimated resources
Norway’s tax regime is highly supportive on the NCS are yet to be proven.
of exploration drilling, allowing operators to In the North and Norwegian seas, unproven
deduct almost 80% of well costs from their tax- resources are primarily situated in areas already
able income. This has helped spur continued opened for petroleum activities. But in the Bar-
activity on the Norwegian Continental Shelf ents Sea, only 45% are located in opened areas.
(NCS), avoiding the more dramatic decline in Average costs for discoveries over the past dec-
drilling that has been seen off the UK. ade were $25 per barrel, according to the NPD.
Even so, exploration spending has taken a “If we can keep the costs at about this level,
hit, and the NPD warned this could have serious future exploration will be profitable even with
consequences further down the line. low oil prices,” the NPD said, forecasting that oil
“Exploration needs to continue at a high would reach $50 per barrel in 2030. ™

Week 43 29•October•2020 www. NEWSBASE .com P17