In the previous survey the companies’ investment estimates for 2022 suggested a decrease of 8.0 cent compared with the corresponding figure for 2021. As can be seen from figure 2, the estimates for 2022 are upward adjusted with 3.3 percent since the previous survey. It is particularly the estimates for fields on stream and exploration that contribute to the upward adjustment.
Quarterly investment statistics for oil and gas extraction and pipeline transport are included in the survey Investments in oil and gas, manufacturing, mining and electricity supply. For more details about total investments, please see the following article.
Upgraded estimate also for 2023
The newest investment forecast for oil and gas extraction and pipeline transport for 2023 is estimated at NOK 135.3 billion. This is 3.6 per cent more than the previous estimate for 2023, given in the May- survey. The upward adjustment is particularly due to higher estimates within fields on stream and field development. The higher estimate within field development is partly due to the delivery of plan for development and operation (PDO) on two new development projects. These projects are now included in this survey.
The estimate for exploration activities, on the other hand, is clearly lower than in the previous measurement, and contributes to dampening the overall increase in estimates. This is the ninth year in a row with a partly significant decrease in the exploration estimate from the measurement in May to the measurement in August for the following year. The exploration estimates given in May of the year before the investment year are based on preliminary budgets, which largely reflect the desired activity in the licence. In the measurements in August, November and February, these wishes are confronted with the companies' total exploration budgets, rig access and the like, so that the estimates gradually become more reality-oriented. Some of the exploration wells that were included in the previous quarter's estimate have now been moved forward in time or have been canceled on the basis of new information and priorities.
The estimate for 2023 is 4.7 percent lower than the corresponding estimate for 2022, given in the 3rd quarter of 2021. This is a lower drop than indicated in the previous survey. The estimates for 2023 then showed a drop of 8.5 per cent. The lower fall that is indicated now comes mostly as a result of the upward adjustment of the 2023 estimate, but also because the corresponding estimate for 2022, given in the 3rd quarter of last year, was lower than in the measurement before, as illustrated in figure 2 above.
It is especially the estimates for exploration and concept studies as well as fields on stream that contribute to the indicated decrease for 2023, but a clear decrease in shutdowns and removals is also estimated. A sharp increase in the smaller categories onshore activities and pipeline transportation is estimated in 2023, and a smaller increase in field development. These three categories thus contribute to curbing the decline now indicated in 2023.
Development projects are only included in the investment survey when a plan for development and operation (PDO) is submitted to the Authorities. In the Parliament’s tax measures package, which was adopted in June 2020, it was provided a favourable taxation for all development investments for PDOs submitted before 1 January 2023. It is expected to be submitted a very high number of plans for development and operation (PDOs) to the government in the 4th quarter. The largest among these are Wisting, NOA Fulla, Krafla and King Lear. If the schedules for the expected projects are maintained, there will be significantly higher investments in field development in 2023 than what is currently included in the survey. Therefore, the decline indicated for oil investments in the initial projection for 2023 should be interpreted with caution. The many development projects that are expected will probably mean that the estimate for 2023 will be sharply adjusted upwards in the upcoming measurements.
Higher investment estimates result in a lower indicated fall in 2022
The investments in oil and gas extraction and pipeline transport for 2022 are now estimated at NOK 172.8 billion. This is 3.3 per cent higher than the corresponding figure for 2021, given in the same period last year. The growth is particularly related to high investment activity within the category fields on stream and exploration and concept studies. In addition, there have been two new developments in the survey since the last time. Nevertheless, the estimate for field development is lower than in the previous survey. The main reason for this is that several developments have been completed and have come into operation, so that costs and estimates for these fields in this measurement have been transferred to the category fields on stream.
With the upward adjustment in this measurement, the estimate for 2022 is 4.8 percent lower than the corresponding estimate for 2021, given in the 3rd quarter of 2021. The indicated decrease for 2022 was in the previous measurement of 8.0 percent. It is field development in particular that drives the decline indicated for 2022, but fields on stream and shutdown and removal also contribute negatively. The remaining main categories contribute little to the indicated change in the level of investment from 2021 to 2022.
The decline in field development must be seen in the context of several development projects being put into operation and others in a final development phase. The new developments that have come about do not fully replace the decline from these. As mentioned in the discussion of 2023, it is expected that plans for development and operation (PDO) will be delivered for a number of developments late this year. Each of these will have relatively low investments made this year, both because developments tend to have low investments in the first year and because the vast majority of developments are expected to start very late this year. But since the planned projects are so numerous, they will still be able to generate significant investments in the 4th quarter of this year.
Marginal seasonally adjusted fall in the second quarter of 2022
The accrued investment costs in the 2nd quarter of 2022 amounted to NOK 43.9 billion. This is 8.5 per cent higher than the accrued investment costs in the 1st quarter. The seasonally adjusted figures, on the other hand, show an investment decrease of 0.2 per cent. This must be seen in the context of the fact that seasonally, investments tend to be clearly higher in the 2nd quarter than in the 1st quarter.
The annual estimate for 2022 assumes moderate growth in the second half of the year
The investments in the first half of this year are 2.7 per cent lower than the investments made in the first half of 2021. Based on this, one is on track in relation to the fact that current estimates for 2022 indicate a fall of 4.8 per cent. With investments of NOK 84.3 billion in the first half of the year, investments of NOK 88.5 billion in the second half of the year are expected in order for the current estimate for 2022 to be realized. In that case, it will represent an increase of 5 per cent from the 1st to the 2nd half of the year. Figures from the last 20 years show that investments have been on average about 10 per cent higher in the second half of the year than in the first half of the year.
On the other hand, figures from these past 20 years show that the annual estimate given in the 3rd quarter of the investment year has been on average 4 percent higher than the final investments. The special thing for the current year is all the developments that are expected to come towards the end of the year. The investments made this year on these projects will come in addition to what is included in the current measurement. This gives reason to believe that final investments this year will be closer to the annual estimate given in the 3rd quarter than in a normal year. It is also not out of the realm of possibility that the investments will be on par with or higher than the estimate given in this measurement.