Despite the coronavirus-induced crisis, investments in oil and gas activity in Norway are expected to rise by 1.6 percent this year compared to 2019, thanks to higher oil prices and the government’s tax relief package for the oil industry, the latest investment survey by Statistics Norway showed on Thursday.
Total investments in oil and gas activity in Norway in 2020, including pipeline transportation, are estimated at US$20.57 billion (184.6 billion Norwegian crowns), up by 2.4 percent compared to the estimate in the previous survey carried out in May 2020. Compared with the corresponding figure for 2019, oil and gas investment in Norway is now expected to increase by 1.6 percent, the August survey showed.
For 2021, investments are set to drop from the currently estimated 2020 level, but the estimate for next year is now 2.1 percent higher than in the May survey, according to Statistics Norway.
Following the oil price collapse, Norway passed at the end of April a package of measures to support the oil and gas industry and the supply chain, including by introducing temporary changes to the taxation system to help companies preserve liquidity and continue with their planned projects.
“To encourage activity and safeguard jobs in this difficult situation, we are proposing some temporary amendments. In practice, these will mean that tax bills are postponed and companies’ liquidity is improved. This will enable oil and gas companies to make more investments,” Minister of Finance Jan Tore Sanner said at the time.
According to estimates from Rystad Energy, the temporary tax relief package for the petroleum industry is set to improve exploration and production companies’ short-term liquidity and reduce breakeven prices for future development projects by about 40 percent on average. The support package will also help Norwegian harsh-environment floater demand rise in 2020 and maintain stable levels in the years to come.