Spill over-effects of opening for petroleum production in Northern Norway

The effects of petroleum activity respectively in the north-eastern Norwegian Sea, Barents Sea south-east and around Jan Mayen are not likely to be very large in a national context, but clearly noticeable. The calculations show the effects of activity in the relevant area, compared to a situation where this activity is not initiated. This can be considered as a study of how the Norwegian economy is affected by a decision to start exploration, followed by developing of the economically viable discoveries. Fiscal policy is assumed unaffected. It is thus not taken into account how the different scenarios will affect the pension fund and thus the frames for oil spending resulting from the fiscal rule.

The effects we study are the direct employment in the petroleum sector that can be expected, and the effects of the demand in the form of capital goods and intermediate input. Uncertainty is discussed for each area in terms of alternative scenarios of relatively high and relatively low quantities of petroleum resources.

The impact on the economy is clearly most significant in the development phase. This is because the demand related to exploration and operation phases are much more modest. The effects during the production phase are dampened by the weakened cost competitiveness as results of higher level of activity in previous phases. In scenarios with modest demand and petroleum production, employment may at some point of time even be lower than a scenario without increased petroleum activity.

In the two scenarios with low and high levels of petroleum activity in the north-eastern Norwegian Sea, total annual employment in Norway increases by respectively 3 000 and 10 000 persons at the most. On average for the period 2014- 2045, the increase is 800 persons with a low level of activity and 2 300 persons with a high activity level. GDP excluding recovery will in the period 2014-2045, on average, increase by respectively 1.5 and 5.3 billion 2009 million annually in the two options.

The scenarios for petroleum activity in the Barents Sea south-east, gives an increase in total employment of between 2 500 and 4 800 persons at the most. In the period 2017-2045, the average increase is 500 persons with a low level of activity and 1 200 persons with high level of activity.

In the two scenarios with low and high level of petroleum activity around Jan Mayen, the total annual employment in Norway increases by respectively 2 000 and 3 800 persons at most. On average for the period 2017-2041 with a low activity level, the increase is estimated to 500 persons. With a high activity level it is assumed a slightly longer production period and the average increase in the period 2017-2045 is estimated to 1 000 persons.