Weak oil market drags on Norway's economy

Industries tied to energy sector weigh down gross domestic product.
By Daniel J. Graeber  |  Aug. 20, 2015 at 8:07 AM
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OSLO, Norway, Aug. 20 (UPI) -- The Norwegian government said Thursday its economy, as measured by gross domestic product, was weakened because of the depressed oil market.

"According to seasonally-adjusted figures, gross domestic product for mainland Norway rose by 0.2 per cent in the second quarter of 2015, after three quarters of weak development," Statistics Norway said in its latest report. "The weak trend is particularly seen in industries supplying the petroleum industry."

Norway is a key oil exporter to European economies, which are emerging only slowly from the last global financial crisis.

The Norwegian Petroleum Directorate, the nation's energy regulator, said oil production in July was 1.56 million barrels per day on average, above 1.4 percent above July 2014 and 6.6 percent higher than NPD expected.

Despite a general growth in crude oil output, most energy companies across the global market are spending less on exploration and related activities in an effort to conserve capital. Statistics Norway said the mining and manufacturing sector declined during the second quarter by 1.5 percent.

"This decline is largely linked to reduced production within oil and gas-related industries," it said. "Value added in petroleum activities and ocean transport declined 1 percent in the second quarter, which contributed to a slight decline in total GDP compared with the previous quarter."

NPD set a goal of adding 5 billion barrels of oil to national reserves. By 2019, operators expect to start production at the Johan Sverdrup field, the fifth largest discovery ever made on the Norwegian continental shelf.

Statistics Norway last month said total investment in the energy sector for 2016 is estimated at $23.6 billion, a 1.4 percent increase from the estimate for 2015.

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