Norway's oil and gas investments, a cornerstone of the country's economy, are set to fall more than previously predicted next year, due to a sharp decline in exploration spending, data from Statistics Norway (SSB) showed on Tuesday. Oil and gas firms have slashed spending repeatedly in their struggle to cope with the 60 percent drop in oil prices since June last year.
The fresh oil survey was broadly in line with the central bank's forecast and would have a limited impact on its rate decision at a December 17 meeting, economists said. "We will probably slightly cut our forecast but it's not enough to trigger a rate cut in December," Danske Bank Chief Economist Frank Jullum said. Economists at SEB and DNB maintained their expectations for a rate cut at the December meeting, while Nordea and Handelsbanken predicted the central bank's key policy rate would remain unchanged at the current record low of 0.75 percent.
More crucial data will come soon, with unemployment and retail sales due out later this week and the regional network survey, the central bank's primary business sentiment gauge, on Friday of next week. Overall 2016 oil industry investments are now seen falling 11 percent on the year to 171 billion Norwegian crowns ($19.77 billion), against 181.2 billion seen in August and 24.7 percent below the 2014 all-time high of 227.3 billion.
The 2016 exploration estimate dropped by 35 percent to 21.5 billion crowns from a previous estimate of 33.3 million crowns. "Due to low oil prices and operator' processes to cut rig costs, the number of active rigs on the Norwegian Shelf is expected to decrease in 2016. The decrease in the exploration estimate for 2016 should be viewed against this background," SSB said. Norwegian oil major Statoil said on Monday it expected less exploration next year. This year's overall investments were seen at 192.8 billion crowns in line with an August estimate of 193 billion.