The estimate for 2022 in the statistics now indicates a fall by 8.1 per cent from 2021 to 2022. Total accrued investments in oil and gas extraction and pipeline transport for 2021 amounted to NOK 177.7 billion, which is 0,9 per cent lower than final investments in 2020. The final investments in 2021 were 2.5 per cent lower than estimated in the previous survey.
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.
Low initial estimate for 2023
The investments in oil and gas extraction and pipeline transport for 2023 are estimated at NOK 131.4 billion. This is 5.1 per cent lower than the estimate given for 2022 in 1st quarter 2021.
The indicated decrease in 2023 is mainly due to low estimates in fields on stream, shutdown and removal and exploration and concept studies. The estimates for field development are in the opposite direction, which is 7 per cent higher than the corresponding estimates for 2022. The estimates also indicate a sharp increase for the investment areas pipeline transportation and onshore activity next year, but since these categories initially have modest activity, they contribute only to a small extent to curbing the decline estimated for the investments as a whole.
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 during the present year, the vast majority of them in the 4th quarter. The largest among these are Wisting, NOA, Krafla, King Lear and Linnorm. 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 grow steeper than in a normal year through the estimate cycle.
Estimate for 2022 upward adjusted
Total investments in oil and gas activity in 2022, including pipeline transportation, are estimated at NOK 159.5 billion. This is 3.3 per cent higher than estimated in the previous quarter. It is especially increased estimates for fields on stream and field development that contribute to the upward adjustment. The increase is partly due to shifts in investments from 2021 to 2022 on some projects. In addition, a new PDO has been delivered to the Authorities since the previous survey.
The estimate for 2022 is 8.1 per cent lower than the corresponding estimate for 2021, given in the 1st quarter 2021. This is a higher fall than suggested in the previous survey. Then the projections for 2022 showed a decrease of 7.2 per cent. The steeper fall that is now indicated is related to the fact that the estimate for 2021 given a year ago increased more than the estimate for 2022 does now.
As Figure 3 above shows, the decline indicated in 2022 is broad; investments in all investment areas are expected to fall compared with the corresponding estimates given for 2021. But there is a marked fall in field development that contributes most to the projected decline in 2022. Several development projects were completed last year, and other developments are nearing completion and have had their investment peak in the past. This means that these projects have either been transferred to the field on stream category or have lower development investments this year than last year. The decline from these will not be fully replaced by investments from new projects or by increased investments in existing developments, therefore a decline in field development is now indicated this year.
Only a minority of the development projects that are expected to come during 2022 plan to submit the PDO for regulatory approval before the fourth quarter. Those that are submitted first in the 4th quarter will have little or no investment this year, while those that are submitted earlier will have more accrued investments this year. If the schedules for these are realized, investments from these developments will be in addition to what is already included in the current estimates for field development.
The estimate for production drilling for 2022 is 11.6 per cent lower than the corresponding estimate was for 2021. It is this type of investment activity that can generate increased production in the short term. The very high oil and gas prices can stimulate the operators to increase their drilling plans on existing fields beyond what is in the current budgets and thus in isolation contribute to an upward adjustment of the 2022 estimate.
Marginal investment decline in 2021
Total investments in oil and gas extraction and pipeline transport for 2021 were NOK 177.7 billion. This is in current value 0.9 per cent lower than final investments in 2020. The decline was driven by significantly lower investments in field development, while all the other investment areas had higher investments in 2021 and thus helped to curb the fall.
Investments in field development amounted to NOK 62.4 billion in 2021. This is as much as 18 percent lower than in 2020. The decline is mainly due to the fact that the largest fields under development on the Norwegian shelf had lower investment activity in 2021 than in the previous year, and that more developments were completed and that investments from these were thus phased out. Investments from new developments were far from large enough to offset this decline.
Investments in fields on stream ended at NOK 75.3 billion, 5 per cent higher than the year before. In current value, these are the highest operating investments since 2015. The high activity in fields on stream may be related to high product prices and favourable tax rules.
High activity in field evaluation and concept studies in 2021
Investment expenditure on exploration and concept studies ended at NOK 27.3 billion in 2021, which is as much as 27 per cent more than the year before. The subcategories field evaluation and concept studies accounted for 67 percent of this growth. These increased by 84 and 365 per cent respectively in 2021. The sharp increase in activity on these cost types is directly related to the large accumulation of new development projects that are expected to come by the end of this year, an accumulation that is mainly generated by the oil tax package. These categories include planning activity for new developments, ie activity related to maturing discoveries for development and operation.
NOK 13.5 billion was spent on exploration drilling in 2021, which is 14 per cent more than in 2020. According to the Norwegian Petroleum Directorate, 40 exploration wells were started in 2021, 9 more than the year before. Of last year's wells, 31 were exploration wells and 9 appraisal wells. Twenty new discoveries were made during the year.
Investments in shutdown and removal amounted to NOK 7.8 billion in 2021. This is 13 per cent more than investments in this category in 2020. These figures reflect that there has been petroleum activity on the Norwegian shelf for a long time. Several fields are shut down and old infrastructure is removed. In addition, several wells are being shut down and permanently plugged.
NOK 4.9 billion was totally invested in onshore activity and pipeline transportation in 2021. This is almost twice as much as in 2020. There has been particularly high investment activity at some onshore facilities in 2021.
Higher investments in 4th quarter
The final investments in the 4th quarter came to NOK 46.5 billion. This is 9 per cent lower than estimated in the previous quarter, but 4.1 per cent higher than the investments in the 3rd quarter, unadjusted. The seasonally adjusted increase from the 3rd quarter to 4th quarter was 0.9 per cent.