OSLO (Businesshala) – Oil and gas firms in Norway have increased their 2022 investment forecasts during the past three months as the industry prepares to take advantage of tax incentives designed to boost activity, according to a National Statistics Office (SSB) survey showed on Thursday.
SSB said the largest trading sector in Norway now expects to invest 154.4 billion Norwegian crowns ($17.6 billion) next year, up from a forecast of 142.0 billion crowns in August.
The forecast for 2021 is now 182.3 billion, up from the 181.5 billion seen in August, and thus the number indicates a decline next year. But investments in 2022 may continue to rise as companies formalize more plans, SSB said.
Economists have said the changes to the Norwegian tax incentives introduced last year will lead to a sharp increase in investment in the sector in 2023. However, SSB is yet to release the forecast for that year.
“A large number of (investment schemes) are expected to be submitted… next year. Most of these will probably be delivered towards the end of next year, but some smaller development projects are also expected to be submitted earlier,” the SSB said.
Norway is the largest oil and gas producer in Western Europe, with a daily output of 4 million barrels of oil equivalent. Investments affect the near-term growth of the Norwegian economy as infrastructure is being built, as well as long-term petroleum production.
Norway’s centre-left government, in office since last month, is determined to continue developing the oil industry here, which is a major source of jobs and export revenue, despite growing opposition from environmental groups amid concerns over climate change. .
In 2020, parliament approved temporary tax incentives here to boost oil and gas investment, triggering promises by Equinor, Aker BP, Lundin Energy and others to accelerate development of the sector.
To qualify for the incentive, projects need to be approved by the end of 2022. This will lead to a double-digit percentage increase in investment in 2023, Handelsbanken Capital Markets said.
($1 = 8.7551 Norwegian Crown)