Fact Sheet 1999. Norwegian Petroleum Activity
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NORWEGIAN 1999 PETROLEUM ACTIVITY | PUBLISHED BY THE ROYAL MINISTRY OF PETROLEUM AND ENERGY FACT SHEET • Norwegian petroleum activity The Royal Ministry of Petroleum and Energy Einar Gerhardsens plass 1 P O Box 8148 Dep, N-0033 OSLO Norway Tel: +47 22 24 90 90 Fax: + 47 22 24 95 65 E-mail: [email protected] Internet homepage: www.oed.dep.no X.400: S=postmaster; 0=oed; P=dep; A=telemax; C=no; Telex: 21486 oedep n _ ^ OLJE- OG ENERGIDEPARTEMENTET Editor: Jan Breivik, MPE Edeting completed in May 1999 Layout/Design: Apropos Advertising Agency, www.apropos.no Sune Aabo Parker, Stig-ErikTokvam, Henning Bakke, Klas Jonsson and Merete Skeibrok Photos: ©Leif Berge and ®0yvind Hagen, Statoil, Elf archives and ©Husmo Foto Field Photos:The operators archives. Print: Kai Hansen Printers DISCLAIMER Portions of this document may be illegible in electronic image products. Images are produced from the best available original document. FOREWORD We have been reminded over the past year of the uncertainty associated with the pro duction of oil and gas resources.The decline in oil prices through 1998 and the early part of 1999 produced a sharp fall in revenues both for the Norwegian state and for the oil com panies. This has meant substantially lower transfers to the Government Petroleum Fund than earlier expected. Company plans for exploration and further development have also been cut back sharply. Postponements have been announced for several projects as a result of the low oil prices, and exploration operations have been cut back substantially. In many respects, a new era has been initiated for Norwegian petroleum operations in that investments is now probably past its peak.This reflects just as much a very high level of capital spending in 1998 as it does a future reduction. Norway's oil and gas industry has developed into an internationally competitive busi ness. Norwegian companies are world leaders in many areas, such as subsea production. Exports of oil/gas-related products and services have expanded sharply in recent years. The decline in domestic investment will increase the significance of foreign involvement. Given today's low oil prices, however, it will be a challenge to ensure that the Norwegian offshore sector remains an attractive petroleum region and thereby prevent a substantial fall in the level of investment into the next century. Active efforts by the companies and the authorities to bring costs down even further and to adopt more efficient forms of organisation off Norway are important. The authorities have also initiated an extensive review of the policy framework. Norwegian oil production declined by four per cent in 1998, to 2.9 million barrels per day. This fall reflected both official regulation of production as well as postponement of and delays to new projects. The reduction in oil production contrasts with developments in the 1980s and early 1990s, when Norwegian oil output showed continuous growth. Production is expected to grow somewhat in 1999, even when it has been regulated by an average of 200 000 barrels per day for the final nine months of the year. Norway's oil output is expected to peak in 2001 at 3.6 million barrels per day. Norway's total recoverable petroleum resources were put at 13.2 billion scm oe at 31 December 1998 - up by three per cent from last year's estimate. This increase largely reflects an upgrading of undiscovered resources and new finds. As a result, estimated remaining reserves rose again in 1998. Anne Enger Lahnstein Minister CONTENTS Foreword by the Minister.......................................................................................... 5 Concepts and conversion factors .............................................................................. 10 Chapter 1 - Summary................................................................................................. 11 Petroleum resources ........................................................................................................... 11 Exploration ........................................................................................................................... 11 Development ....................................................................................................................... 11 Oil and gas production ....................................................................................................... 11 Proceeds from oil and gas sales .......................................................................................... 11 Chapter 2 - A Brief History......................................................................................... 12 North Sea............................................................................................................................. 14 Norwegian Sea.................................................................................................................... 14 Barents Sea........................................................................................................................... 14 Chapter 3 - State Organisation of Petroleum Operations....................................... 16 Ministry of Petroleum and Energy ...................................................................................... 17 Ministry of Local Government and Regional Development ............................................ 19 Norwegian Petroleum Directorate ..................................................................................... 19 State's direct financial interest (SDFI)................................................................................ 19 Chapter 4 - Petroleum Operations in the Norwegian Economy ............................. 20 Investments......................................................................................................................... 21 Other key figures ................................................................................................................. 22 Chapter 5 - State Revenue .......................................................................................... 24 Tax and royalty system........................................................................................................ 25 SDFI....................................................................................................................................... 27 Chapter 6 - Mainland Activities and Petroleum Research ....................................... 28 The offshore supplies industry.......................................................................................... 29 Employment effects............................................................................................................ 29 Petroleum research............................................................................................................. 30 Chapter 7 - Petroleum Resources .............................................................................. 32 Chapter 8 - Production .............................................................................................. 36 Production forecast ............................................................................................................. 39 Chapter 9 - Marketing Status for Norwegian Petroleum Products......................... 42 The norm price................................................................................................................... 43 Norwegian crude oil in the world market...................................................................... 44 Sales of natural gas liquids (NGLs).................................................................................. 44 CONTENTS Dry gas sales....................................................................................................................... 46 Refining ............................................................................................................................... 49 Retail sales.......................................................................................................................... 49 Petrochemical industry.................................................................................................... 49 Chapter 10-Environmental Aspects............................................................................. 50 Emissions to air.................................................................................................................. 51 Discharges to sea............................................................................................................... 53 Framework conditions ...................................................................................................... 54 Cooperation with the industry........................................................................................ 55 Chapter 11 - Legal and License Framework .................................................................. 56 Introduction ....................................................................................................................... 57 Main features of the licensing system........................................................................... 57 Key documents and legal provisions in the licensing system.......................................... 58 Other key legal provisions ............................................................................................... 59 Chapter 12 - Licencing Rounds ......................................................................................