The upward adjustment for 2023 is driven by higher estimates within the categories fields on stream and field development. The increased estimates are partly related to increased prices for input factors in the industry. The investment estimate for 2023 now indicates a growth of 18 percent compared to the corresponding estimate for 2022, given a year ago, the statistics oil and gas, manufacturing, mining and quarrying and electricity supply show. This is the same growth rate as was estimated in the previous survey.
The strong growth indicated has its background in the fact that many new field developments started in December last year. These had almost no incurred costs last year, but they will have significant investments this year.
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.
Somewhat higher estimate for 2024
The investments in oil and gas extraction and pipeline transport for 2024 are estimated at NOK 181.9 billion. This is as much as 39 per cent higher than the estimate given for 2023 in 2nd quarter 2022.
Almost all the indicated growth is driven by the fact that the estimate for field development is more than twice as high as the corresponding estimate for 2023, given a year ago. Development projects are only included in the investment survey when a plan for development and operation (PDO) is submitted to the authorities. In the Norwegian parlament's tax measures package, which was adopted in June 2020 to remedy the industry in connection with the sharp drop in oil prices early in the corona pandemic, favorable taxation was provided for all developments for which PDO was delivered before the end of last year. This is the reason why a great many PDOs were delivered last year, most of them towards the end of the year. The far higher estimate for 2024 now than in the corresponding estimate for 2023 a year ago is largely due to the fact that these PDOs were not included in the count a year ago, but they are included in the count now. As figure 2 above shows, the estimate for 2023 has increased a lot since the estimate given a year ago. Since few new projects are expected to be delivered in the next couple of years, it is unlikely that the estimates for 2024 will increase to the same extent as the estimates for 2023 have done in the past year. Therefore, the indicated growth now estimated for 2024 should be interpreted with caution.
The estimates for fields on stream and exploration are both only marginally higher than the corresponding estimates for 2023. The estimates also indicate a strong rise for the categories pipeline transportation and shutdown and removal in 2024, but since these categories initially have low investment levels, they only contribute modestly to the increase estimated for the investments in total. It is only the estimate for onshore activities that has a lower estimate for 2024 and which therefore contributes to pulling the total estimate down somewhat.
The estimate for 2023 is further adjusted upwards
Total investments in oil and gas activity in 2023, including pipeline transportation, are estimated at NOK 197.8 billion. This is NOK 10 billion more than estimated in the previous quarter. It is mainly within fields on stream and field development that the increase will occur, but the estimates are also slightly adjusted upwards in the other investment areas. For fields on stream and field development as a whole, it is especially within the commodity subcategory that investments increase from the previous measurement, while the other categories of services and production drilling have a more moderate increase. There have been no new projects, so the increase is in already existing fields. The increase also comes despite the fact that one of the new development projects has been canceled since the previous measurement, and the estimates for this project have therefore been taken out of this measurement, both for this year and for next year. Some of the increase in the estimate is related to the growth in the prices of many investment goods. The winter's weakening of the Norwegian krone against the dollar and euro has reinforced this price increase measured in Norwegian kroner, which in turn has increased the oil companies' investment budgets. According to preliminary figures from the Quarterly National Accounts, investment prices in the petroleum sector increased by 8.1 per cent in the 1st quarter compared to the corresponding quarter last year.
The estimate for investments in pipeline transportation and extraction of oil and gas for 2023 is now 18 per cent higher than the corresponding estimate for 2022, given in the 2nd quarter of last year. This is the same growth rate that was indicated for 2023 in the previous survey. As Figure 2 above shows, the estimates for 2022 given in the investment year have increased in all measurements, also towards the end of the estimate cycle, which is unusual. This happened mainly as a result of many new developments starting last year. It is not expected that there will be many new developments this year, therefore it is likely that the further estimated development for 2023 may be flatter than the ongoing estimated development for 2022, which in that case will result in a lower investment growth in 2023 than what is indicated now.
As Figure 4 above shows, the indicated increase for 2023 is driven by a sharp increase in field development. The other categories overall have a negative contribution. Fields on stream and pipeline transportation also contribute slightly to higher investments, while exploration, onshore activities as well as shutdowns and removals contribute to dampening growth in 2023.
Seasonally adjusted investment growth in the 1st quarter
The final investments in the 1st quarter came to NOK 45.3 billion. This is 8.6 per cent lower than estimated in the previous quarter, and 7.2 per cent lower than the investments in the 4th quarter, unadjusted. The seasonally adjusted growth from the 4th to the 1st quarter, on the other hand, was clearly positive at 4.4 per cent. The reason for this is that seasonally, investments tend to be far lower in the 1st quarter than in the 4th quarter. The seasonally adjusted increase from the 4th to the 1st quarter came mainly within field development, while there was lower activity especially within fields on stream in the 1st quarter.