News of a major oil discovery and a huge drilling rig deal this week has fueled expectations that Norway’s oil and offshore industries are on the verge of another “golden age.” Some analysts see a new “bonanza” for oil and offshore companies.
Among them is Terje Fatnes, an analyst for brokerage firm SEB Enskilda in Oslo. He told newspaper Dagens Næringsliv (DN) that investments by oil companies this year and next year will be much higher than expected. “That means a bonanza,” Fatnes told DN.
The outlook over the next 12 months, he said, is “extremely good” based on interviews his team has conducted with many of the world’s largest oil companies – and that was before news broke that the world’s largest oil rig company was buying Stavanger-based Aker Drilling, and before Norwegian oil company Statoil announced that it had struck huge new sources of oil in the North Sea, almost in its own backyard.
SEB Enskilda’s interviews indicated that oil companies will boost their investments by 18 percent this year, compared to last year. That’s way up from earlier projections that investments in oil exploration and production would only rise by 3 percent.
The oil companies also are expected to boost investments by 12 percent next year – all told, companies representing around 70 percent of the world’s oil-related investments will spend more than USD 735 billion on exploration and production in 2011 and 2012, according to SEB Enskilda.
That’s good news for Norway’s economy, long pumped up by the country’s oil and offshore industries. Norway has built up a major oil-related industrial base and expertise since oil was first discovered on the Norwegian continental shelf in 1969, and much of the investment likely will flow into Norwegian seismic exploration firms, rig operators, engineering companies and equipment suppliers.
“This is very positive,” Trond Omdal, an analyst at Arctic Securities in Oslo, told DN. “The combination of a high oil price and ‘easy’ oil can strengthen Norwegian continental shelf activity in relation to international fields.”
Norway’s continental shelf in the North Sea, the Norwegian Sea and the Barents Sea will likely also attract even more interest now from international players in addition to Norwegian companies. Fatnes told DN that they’ll be attracted by news of major oil discoveries like Statoil’s initial announcement last week that it struck new recoverable oil reserves of as much as 400 million barrels on its Aldous Major South field.
Now that’s soared to as many as 1.2 million barrels, with the possibility of more oil to be found on the adjacent Aldous Major North field. With both of them located just 160 kilometers off the coast at Stavanger, and in a relatively conventional environment (not deep-water, and with “normal” pressure and temperature conditions, according to Statoil’s exploration boss Tim Dodson), oil firms may well take another look at areas where many thought resources were close to being exhausted.
More details, meanwhile, continued to emerge from Statoil’s announcement Tuesday that the Aldous Major South discovery was “in communication” with the nearby Avaldsnes field. Dodson called it “very special,” after Statoil’s geologists findings that its formation is “very different” from other fields.
Few were happier than geologist and exploration chief on the field, Sigrid Borthen Toven. She’s in charge of the Statoil division that keeps searching for oil in the southern portion of the North Sea and she was thrilled. “It’s incredibly satisfying,” she told DN on Wednesday. The discovery already has been deemed as the largest in the world so far this year.
Views and News from Norway/Nina Berglund
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