Norwegian oil and gas companies should boost investments in exploration and production to slow an expected decline in the country's output in the coming years, the national petroleum industry regulator said in a resource report on Wednesday.
Norway is Europe's largest gas supplier and a major producer of oil, pumping some four million barrels of oil equivalent per day, but many of its largest offshore fields are in decline and there are currently no new developments scheduled for the 2030s.
Norway's Offshore Directorate expects the country's oil and gas output to peak in 2025, it said on Wednesday, in line with previous forecasts, but its subsequent decline will depend on discoveries and boosting recovery from existing fields.
Oil and gas production represents around a quarter of the country's annual gross domestic product, and the accumulated difference in revenue until 2050 between the highest and lowest production estimates amount to some $1.4 trillion, the NOD said.
"More exploration and investment in fields, discoveries and infrastructure must therefore be made if the decline in production is to be slowed down," Kjersti Dahle, NOD's head of technology and analytics, said in a statement.
In January, the NOD said it expected oil and gas investments to fall to 193 billion Norwegian crowns ($18.37 billion) in 2028 from 240 billion crowns in 2024.
The NOD's base case scenario sees Norway's petroleum output gradually declining by about two-thirds by mid-century to around 1.4 million barrels of oil equivalent.
This can be partly mitigated, however, if more resources are discovered and developed, and in a "high scenario" Norway would produce some two million barrels per day in 2050, according to the regulator's prognosis.
Oil companies plan to drill more than 40 exploration wells off Norway this year, including eight in the Barents Sea.
"But it's not enough to decrease the steepness of the (production) decline," Dahle told Reuters.
She said the regulator wanted to see oil companies taking more risks to drill in frontier areas where chances of making larger discoveries are higher.
NOD's lowest production scenario sees oil and production falling to near zero by 2050, if exploration in the Arctic Barents Sea were to fail and few new discoveries were made elsewhere.
While Norway says its oil and gas production complies with the Paris climate accords, it is fiercely opposed by environmentalists and others concerned that carbon emissions from the burning of hydrocarbons contributes to climate change.
($1 = 10.5048 Norwegian crowns)
(Reuters - Reporting by Nerijus Adomaitis; Editing by Terje Solsvik and Jan Harvey)