Investments and operating costs

In 2023, the authorities have approved several plans for new field developments and several amended plans for the further development of fields in operation to increase recovery and/or extend their lifetime.
In 2023, the authorities have approved several plans for new field developments and several amended plans for the further development of fields in operation to increase recovery and/or extend their lifetime.
Overall costs Exploration costs Investments Operating costs

Major investments have been made in exploration, field development, transport infrastructure and onshore facilities since petroleum activities started on the Norwegian continental shelf. Fields that are on stream also continue to require a substantial level of investment. Much of the Norwegian shelf is now served by an extensive network of installations and pipelines tied into onshore facilities. New discoveries can be tied back to this infrastructure. This will encourage a high level of activity and effective exploitation of resources on the shelf in the years ahead.

The oil companies and the supply industry have worked hard to improve profitability by operating more efficiently and reducing costs. This makes new projects profitable even if oil prices are low.

The cost estimates below are based on assumptions about oil price developments, cost trends and investment decisions by oil companies. The estimated figures are therefore considerably uncertain, and the uncertainty increases over time.

Johan Sverdrup field (phase 1)
Concept drawing of the Johan Sverdrup field (phase 1). Illustration: Equinor

Overall costs

The high level of investments and exploration activity, combined with rising operating costs, resulted in record overall costs on the Norwegian continental shelf in 2014. Developments after 2014 have led to a considerable reduction in total costs, but the activity level today is historically high.

The figure below shows historical figures and estimates for the Norwegian shelf for investments, costs for field operation, exploration, decommissioning and disposal, as well as other costs. In 2022, the overall costs were around NOK 300 billion. Investments made up about 55 per cent of this, operating costs 30 per cent, and exploration costs about eight per cent. Total costs are expected to increase in real terms by ten per cent in 2023 and by further seven per cent in 2024. The increase in total costs towards 2024 is largely related to increased investments due to investment decisions taken for several projects in the autumn of 2022. From 2025, a decrease in total costs is expected.

Overall costs by category

Updated: 11.01.2024

Historical figures for 2011-2022 and forecast for 2023-2028

Source: Norwegian Offshore Directorate

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Overall costs by category – Historical figures for 2011-2022 and forecast for 2023-2028

Exploration costs

Exploration costs include costs related to seismic data acquisition to map potential petroleum deposits under the seabed and related to drilling exploration wells. Exploration wells are divided into two types, wildcat wells and appraisal wells. Wildcat wells are drilled to find out whether there are hydrocarbons below the seabed. When a discovery has been made, appraisal wells may be drilled to obtain more data about the size and extent of the discovery.

In 2023, exploration costs on the Norwegian shelf amounted to NOK 26 billion. A total of 33 exploration wells were completed, 21 of which were wildcat wells and 12 were appraisal wells. Exploration drilling resulted in 15 discoveries in 2023.

Exploration costs and number of exploration wells

Updated: 11.01.2024

Historical figures for 2011-2022 and forecast for 2023-2028

Source: Norwegian Offshore Directorate

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Exploration costs and number of exploration wells – Historical figures for 2011-2022 and forecast for 2023-2028

Investments

Major investments have been made in field development, infrastructure and onshore facilities in Norway, and the development plans submitted to the authorities in 2022 will contribute to a continued high level of activity in the coming years. At the same time, substantial investments are being made in producing fields to improve recovery and extend the lifetime of the fields. This requires new wells, modification of existing facilities and new infrastructure. Total investments, excluding exploration, were NOK 158 billion in 2022 and are estimated to be NOK 201 billion in 2023. Total investments are expected to increase to NOK 207 billion in 2024.

The overall investments in the petroleum sector (including exploration and decommissioning costs) account for about one-sixth of total investments in production capital in Norway. This is far more than for any other industry in Norway. Even the smaller offshore projects are comparable to the largest industrial investments on mainland Norway.

Investments in the petroleum sector account for about one-sixth of total investments in production capital in Norway

In 2023, one plan for a new field development has been submitted. It deals with the development of the Eirin gas discovery, which is planned to be tied-back to Gina Krog. No investment decisions have been made on fields in operation that required submission of a new development plan to the authorities in 2023.

Several larger projects on fields in operation, as well as new field developments, contribute to a relatively stable activity level for the next few years.

Investments distributed on field status

Updated: 11.01.2024

Historical figures for 2011-2022 and forecast for 2023-2028

Source: Norwegian Offshore Directorate

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Investments distributed on field status – Historical figures for 2011-2022 and forecast for 2023-2028

Investments by main category

Updated: 11.01.2024

Historical figures for 2011-2022 and forecast for 2023-2028

Source: Norwegian Offshore Directorate

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Investments by main category – Historical figures for 2011-2022 and forecast for 2023-2028

Operating costs

The main operating costs on the Norwegian shelf are those related to the maintenance of platforms and wells, as well as costs for daily operation of the facilities. These include labour costs for all personnel who perform modifications and maintenance of machinery and other equipment. This work is essential if costly production downtime is to be avoided.

At the end of 2023, 92 fields on the Norwegian continental shelf were producing oil and gas, and the total operating costs for the year were close to NOK 85 billion. The operating companies are engaged in efforts to reduce the operating costs; however, increased costs for power contribute to somewhat higher costs.

Operating costs distributed on field status

Updated: 11.01.2024

Historical figures for 2011-2022 and forecast for 2023-2028

Source: Norwegian Offshore Directorate

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Operating costs distributed on field status – Historical figures for 2011-2022 and forecast for 2023-2028

Operating costs by main category

Updated: 11.01.2024

Historical figures for 2011-2022 and forecast for 2023-2028

Source: Norwegian Offshore Directorate

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Operating costs by main category – Historical figures for 2011-2022 and forecast for 2023-2028
Updated: 20.02.2024