Norwegian oil companies raise investment forecast for 2022

General view of the Johan Sverdrup oil rigs from Equinor in the North Sea, Norway, December 3, 2019. REUTERS / Ints Kalnins // File Photo

OSLO, Nov. 18 (Reuters) – Norwegian oil and gas companies have increased their investment forecast for 2022 over the past three months as the industry prepares to take advantage of tax incentives designed to boost activity, a revealed a survey by the National Bureau of Statistics (SSB) on Thursday.

Norway’s largest trading sector now plans to invest NKr 154.4 billion ($ 17.6 billion) next year, up from NKr 142.0 billion in August, SSB said.

The forecast for 2021 is now $ 182.3 billion, down from $ 181.5 billion in August, so the numbers point to a drop next year. But investments in 2022 could continue to rise as companies formalize more plans, SSB said.

A change in Norwegian tax incentives, introduced last year, is likely to trigger a surge in investment in the sector in 2023, economists said. However, SSB has yet to release a forecast for this year.

“A large number of (investment plans) are expected to be submitted … next year. The vast majority of them will likely be delivered at the end of next year, but some minor development projects are also expected to be submitted earlier, “SSB said.

Norway is the largest producer of oil and gas in Western Europe with a daily production of 4 million barrels of oil equivalent. The investments have an impact on the short-term growth of the Norwegian economy as infrastructure is built, as well as on longer-term oil production.

Norway’s center-left government, in office last month, is determined to continue developing the oil industry, a major source of jobs and export income, despite growing opposition from environmental groups to the concerns about climate change.

In 2020, Parliament approved temporary tax incentives to boost investment in oil and gas, triggering promises from Equinor (EQNR.OL), Aker BP (AKRBP.OL), Lundin Energy (LUNE. ST) and others to speed up developments on the ground.

To qualify for the incentives, projects must be approved by the end of 2022. This in turn will lead to double-digit percentage growth in investments in 2023, Handelsbanken Capital Markets said.

($ 1 = 8.7551 Norwegian crowns)

Reporting by Terje Solsvik, editing by Nora Buli, Nerijus Adomaitis and Lincoln Feast

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