Norwegian oil investments to hit record high as inflation drives up costs

Norway in recent years sanctioned a string of new field developments as companies took advantage of pandemic-era tax breaks to fast-track projects, part of its strategy to extend oil and gas production for decades to come.

The country’s biggest business sector now expects to invest a record 257 billion Norwegian crowns ($23.99 billion) in 2024, up from an estimate of 246.9 billion crowns in May and exceeding a previous all-time high of 224 billion crowns in 2014.

Preliminary estimates for oil and gas investments in 2025 stood at 240 billion crowns, compared with a prior view of 215.8 billion crowns in May.

“Significantly higher costs have now been reported for some development projects than the operators had previously estimated,” SSB said in a statement.

The weakening in recent months of the Norwegian currency against the euro and the dollar contributed to raising the cost of investments, it added.

Persistently high oil prices had also led companies to drill more wells at existing fields, potentially speeding up production.

However, there had been no new field development projects added since the May forecasts, which meant that the whole cost increase will be for existing developments, the agency added.

“These are additional investments that are unlikely to contribute to significantly expanding future production capacity beyond what was previously planned,” according to SSB.

Investment forecasts normally rise as companies firm up spending plans in the months leading up to a new year.

Norway’s petroleum production is fiercely opposed by environmentalists and others concerned that carbon emissions from the burning of oil and gas contributes to climate change.

While Norway backs the Paris climate accords and the global goal to transition away from fossil fuels, it also says the world will need access to oil and gas for many years to come.

($1 = 10.7126 Norwegian crowns)