By Kjetil Malkenes Hovland
OSLO--Norway's oil investment boom is set to continue in 2013
but is showing signs of overheating, with higher costs and frequent
delays, consulting firm Wood Mackenzie said Thursday.
Oil companies operating in Europe's second largest oil exporter
boosted their investments to a record $25 billion in 2012, amid
record-high oil prices, but most of it was spent on boosting
production in existing fields, "in particular on increasing
recovery from giant fields like Ekofisk and Troll," said Malcolm
Dickson, Wood Mackenzie's Norway Upstream analyst.
A record number of production licences was awarded in 2012, Wood
Mackenzie said, but discoveries disappointed.
In its annual review of the industry the firm said oil service
companies are operating at peak capacity, which had led to rising
costs. It expected the delays and cost overruns seen in 2012 to
continue into 2013.
"Project delays and overspend will be a common feature on the
shelf, as companies struggle to access rigs and equipment on time
or [with]in budget," Mr. Dickson said.
Norway's petroleum production peaked in 2004 at 4.54 million
barrels of oil equivalent per day. In 2011, the petroleum
production had fallen to 3.8 million barrels per day. 2012 figures
will be released Friday.
2013 is expected to be another record-year for Norway's oil
sector, the firm said, with huge investments made in fields like
Asgard, Edvard Grieg, Martin Linge and Ivar Aasen.
Wood Mackenzie said the country's oil sector had traded assets
worth a record $3.9 billion in 2012, up 70% on the year. A key deal
was Statoil ASA's $1.2 billion pact with Wintershall to exchange
assets. Another key deal was OMV AG's acquisition of RWE AG's
interest in the Edvard Grieg field.
"We expect mergers and acquisitions to continue to be buoyant in
Norway in 2013" on the back of high activity, high costs and a
tight rig market, Mr. Dickson said.
Discoveries disappointed in 2012, with 14 discoveries totaling
709 million barrels of oil equivalent, down 8% on the year,
including the Barents Sea discovery Havis, Norwegian Sea find
Zidane-2 and North Sea find King Lear.
The number of exploration and appraisal wells dropped to 43 in
2012 from 54 in 2011, due to a rig shortage and longer drilling
times. Wood Mackenzie expected 55 wells to be drilled in 2013.
Seven new developments were sanctioned in 2012, the firm said,
which was less than previously expected, but "still healthy."
-Write to Kjetil Malkenes Hovland at
kjetilmalkenes.hovland@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
