In the previous survey, the oil companies' investment estimates for 2021 indicated an increase of 0.9 per cent compared with the corresponding estimates given for 2020 at the same time last year. The development has gone from indications of a small growth in the previous survey to a marginal fall now, because the estimate for 2020 increased in the survey a year ago compared with the survey in the 2nd quarter of 2020, as Figure 2 below shows.
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.
Investment decline in 2022
The newest investment forecast for oil and gas extraction and pipeline transport for 2022 is estimated at NOK 142 billion. This is 0.5 per cent lower than stated in the previous survey. Lower exploration estimates in the current measurement do not fully correspond to higher estimates in fields in operation and field development.
The estimate for 2022 is 4.4 per cent lower than the corresponding estimate for 2021, given in the 3rd quarter of 2020. This is a somewhat steeper fall than indicated in the previous survey. Then the estimates for 2022 showed a fall of 1.9 percent. The higher fall that is now indicated is due to a marginally downgraded estimate for 2022 now from the previous survey and an upward adjustment in the estimate given for 2021 in similar measurements last year. As Figure 2 above shows, the estimate for 2021 has increased significantly in later surveys. The estimate for 2022 must therefore increase correspondingly in future surveys in order to maintain the decline of 4.4 per cent, which is now indicated.
It is especially the estimates for field development that contribute to the indicated decline for 2022. The estimate for this category is 16 per cent lower than the corresponding estimate for 2021. The decline is related to developments being completed in 2021 or early 2022. On other developments, investments are phased down in 2022 compared to this year. In addition, investments in 2022 will be reduced as a result of lower investments in the categories shutdown and removal, fields on stream and pipeline transport. The projections for exploration activities, on the other hand, suggest an increase next year and therefore dampen the decline in 2022.
Developments are only included in the investment survey when a plan for development and operation (PDO) is submitted to the authorities. It is expected that a PDO will be submitted for a few more projects this year. Among these are Frosk and Tommeliten Alpha. These will have higher investments next year than this year, and will be included in later surveys when they are delivered. The PDO is expected to be delivered on a large number of projects by next year. This has to do with the fact that the Parliament's tax measures package, which was adopted last year, provides favorable taxation for all development investments for which the PDO is submitted before 1 January 2023. Investments in projects tend to be modest in the first year of a development. The vast majority of these projects also plan to start up late next year and will therefore have relatively low investments in 2022. These will have much higher investments in the years after 2022.
Marginal decline in investments is indicated for 2021
The investments in oil and gas extraction and pipeline transport for 2021 are now estimated at NOK 181.5 billion. The estimate is 0.2 per cent lower than the figure stated in the previous survey in May. The estimates for field development and fields on stream show a decline, while the estimates for exploration and onshore activities increase compared with the previous survey.
The estimate for 2021 is 1.6 per cent lower than the corresponding estimate for 2020, given in the 3rd quarter of 2020. The decline is driven by an indicated decline of 21 per cent in field development. This has to do with the fact that the phasing out of large developments from 2020 to 2021 is to a small extent replaced by new field developments. This decline is almost matched by growth in exploration, fields on stream, shutdown and removal. Exploration activity has picked up again this year after being cut sharply last year as a result of very low oil prices in connection with the corona pandemic.
Seasonally adjusted fall in the 2nd quarter of 2021
The final investments in the 2nd quarter of 2021 amounted to NOK 45.6 billion. This is 11.5 percent higher than in the previous quarter. The seasonally adjusted figures nevertheless show a decline of 1.6 per cent. This must be seen in connection with the fact that investments seasonally tend to be clearly higher in the 2nd quarter than in the 1st quarter.
Investments in the first half of this year are 3 per cent lower than investments made in the first half of 2020. This corresponds relatively well with the current estimate for 2021, which indicates a decline in investment of 1.6 per cent. Investments of NOK 86.6 billion in the first half of the year require investments of NOK 95 billion in the second half of the year for the current estimate for 2021 to be realized. In that case, it will represent a growth of 9.7 per cent from the first to the second half of the year. Higher investments in the second half of the year than in the first half of the year are in line with the seasonal pattern. For 2020, however, this growth was only 1.1 percent.
Figures from the last 20 years show that the annual estimate in the 3rd quarter of the investment year has on average been 3.9 per cent higher than the final investments. In only the first of these years, in 2001, final investments have ended higher than projected in the 3rd quarter. It is therefore common for a small proportion of investment plans to be postponed to the next year.
The design of the oil tax package can give licensees extra incentives to implement as many of their investment plans as possible during 2021. All types of investments, except for shutdown and removal, are covered by the temporary tax rules until the year 2021. From 2022, investments included in the PDOs that are sanctioned before 2020 will no longer be covered by the favorable tax rules. This year, it will therefore be more expensive than usual to postpone this type of investment to the next year. This may contribute to somewhat smaller shifts in investment plans from 2021 to 2022 than normal.