Norway urges caution in 2019 oil and gas investment forecast

Aug. 23 (UPI) -- Norwegian economists said Thursday they were urging a degree of caution in a forecast showing an increase in oil and gas investments next year.

Statistics Norway, the government's record-keeping agency, said it expected total investments in the oil and gas sector next year of $19.8 billion, about 6 percent higher than its previous estimate. The agency stated, however, that forecast should be met with caution.

"Although the plan for development and operation for Johan Sverdrup phase 2 very likely will be submitted in late August, which will increase the 2019 estimate in the next survey, it is reason to believe that comparable estimates for 2018 and 2019 will converge in the survey in the first quarter of 2019 and with that indicate a lower growth for 2019 than indicated in the present survey," the agency's statement read.

Development of the phase 1 part of Johan Sverdrup is already underway and production should begin in late 2019. Phase 2 will take production capacity from around 440,000 barrels of oil per day to 660,000 barrels per day by 2022. Plans for phase 2 will be submitted to Norwegian regulators in the second half of this year and the total field is expected to stay in production for about 50 years.

Contracts worth more than $5.7 billion have been awarded for Johan Sverdrup so far and most of those have gone to companies in Norway.

Statistics Norway said its estimated increase for 2019 was due to higher investments in field exploration and development, which was offset by declines from fields already on stream and in pipeline transportation.

Norway is an important oil and gas supplier, designating nearly all of its offshore production to the European economy.

For July, the nation's energy regulator reported total oil production averaged 1.53 million barrels per day, about 2.7 percent below forecast. Total natural gas production, however, was 6 percent higher than forecast, putting total production above government forecasts by 2.2 percent.

Both oil and gas production averages for July were higher than the previous month, but lower year-over-year.

Statistic Norway reported the nation's economy was showing signs of modest growth.

"The growth in mainland gross domestic product is mainly due to increased service production, especially retail trade, business services and information technology," its report read.