Norway’s oil companies have increased their 2017 investment plans in the last three months, signalling a smaller-than-expected contraction for the industry, a survey by the statistics office showed on Thursday.
Investments in oil and gas extraction and pipeline transport were still expected to fall for the third year in a row as companies cut the spending after oil prices fell by more than 50 percent over the last two-and-a-half years.
The country’s oil companies now plan to invest 149.4 billion crowns ($17.87 billion) next year in oil and gas extraction and pipeline transport, 1.9 percent more than the 146.6 billion crowns seen last November but down from 163.3 billion in 2016.
“The increase is mainly due to higher estimates for field development, fields on stream and shutdown and removal,” Statistics Norway said in a statement.
The numbers were helped by some removal projects being postponed from the fourth quarter to 2017, it added.
The 2017 forecast should be viewed as positive news for the economy, Nordea Markets economist Erik Bruce said, adding it was probably 4-5 percent ahead of the central bank’s forecast when measured in inflation-adjusted terms.
“It’s an argument in favour of the central bank lifting its interest rate path projections at the March meeting,… but not to the point of raising rates.” he added.
SEB economist Erica Blomgren also said the survey was positive for the economy.
“The central bank’s forecast (for 2017) may turn out to be too pessimistic,” she added.
The Norwegian central bank said in December it expected to keep interest rates steady at a record low 0.5 percent in the years ahead, but added the probability of a rate cut was greater than the chance of a hike.
Over the last two years oil and gas investments contracted by 27 percent, after rising by 70 percent from 2010-2014 when high and relatively stable oil prices supported new developments and high drilling activity offshore Norway.
The Norwegian oil and gas industry’s share of gross domestic product (GDP) contracted to 12 percent in 2016 from 25 percent at its peak in 2008. Steve Grogan Womens JerseyShare This