Oil Industry Escaped A Loud Bang

Oil Industry Escaped A Loud Bang

Oil industry escaped a loud bang.

Without the Storting’s crisis package, the corona blast could have been even worse for the oil industry, believes Minister of Petroleum and Energy Tina Bru (H). – Everything had stopped in a completely different way, she says.

On Monday, Bru was presented with the third development plan after the Storting’s crisis package. This took the form of a video transmission from Stavanger, where Equinor and partners Petoro, Vår Energi and ConocoPhillips presented the plan for Breidablikk at NOK 18.6 billion.

Breidablikk is one of the largest discoveries on the shelf that has not yet been developed, and the largest project where a development plan has been submitted after the corona pandemic and the resultant fall in the prices of oil.

Bru expects there is going to be more development plans after the crisis package.

One reason is that the liquidity situation was so serious for many of the companies when everything just collapsed at the beginning of March that you had to put things on hold. One could not continue working in the project organizations. Everything stopped, she says.

Without a crisis package, it would also have been more demanding to make more long-term plans, she believes.

The most recent estimates from oil companies operating in Norway are that they will invest NOK 184.6 billion this year, while the estimate for 2021 is NOK 148.6 billion.

The Minister believes that the Breidablikk project is so profitable that it would have been set in motion even without the crisis package. Breidablikk contains around 200 million barrels, and will be profitable as long as the oil price stays above 31.7 dollars a barrel.

Exactly this project is a good and robust project that would probably go anyway. At least that is what we have expected. But it is as they say that the tax package has contributed to increasing robustness, that it has become a more robust project, says Bru.

The Minister believes that it remains to be proven that projects will not be profitable for Norway and believes that there is no indication that this is the case.

The point of that tax package is not to trigger projects that would not have come anyway. It is very limited in time, it is temporary. It should be well done to mature some project that no one has heard of to get into that package, it will not happen. So no, I do not share that concern, says Bru

She says that the companies are responsible for ensuring good projects and that they and the state have a common interest in the projects having good profitability.

Bru says: “We have a common interest in this. I have confidence that they will continue to be concerned about it, despite the fact that we have a temporary small change in our tax regime.”

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