Norway to lead oil investments in 2023

The Organisation of the Petroleum Exporting Countries (OPEC), forecasts a $474 billion increase in oil and gas exploration and production investment in third countries, i.e. outside OPEC, by 2023.

Investment levels will increase by 10% compared to 2022, slightly more than before the pandemic, but still below the record level of 2014 when $747bn was invested. Although OPEC continues to maintain its demand forecasts for crude oil and the organisation itself has decided to cut production this year, third countries are expected to increase investment in oil and gas exploration to meet demand. 

OPEC left its global oil demand forecast for 2023 unchanged and put demand at 2.3 million barrels per day. It also reduced its estimate of global commercial oil inventories to 2.81 billion barrels. As for non-OPEC oil producers' supply growth, it says it will reach 1.4 million barrels per day this year. 

Norway will lead the increase in this type of investment this year, with an estimated 26% increase in oil and gas. It will be followed by Brazil, the United States and Canada in terms of investment, according to OPEC's monthly report for May. 

In 2022, Norway earned record oil and gas revenues due to higher gas prices in Europe. According to Statistics Norway (SSB): "The Norwegian state collected 1.45 trillion kroner (€131 billion, $139.4 billion) from hydrocarbons, by far the highest figure ever recorded". This is three times the previous year's revenue of 498 billion kronor.

This explosion in profits is due to higher hydrocarbon prices because of the war in Ukraine. In 2022, Norway was Europe's largest supplier of natural gas, whereas previously Russia was the main supplier. This has earned it a larger market in the EU, having limited imports from Russia while taking advantage of high gas prices. 

In early 2023, Norway announced that it plans to offer energy companies a record number of oil and gas exploration blocks in the Arctic in a bid to prolong its hydrocarbon production.

The country wants to offer 78 blocks to energy companies in the Barents Sea and 14 new blocks in the Norwegian Sea, which extends north of the North Sea and above the Arctic Circle, bringing the total number of blocks on offer to 92. Compared to 2022, the Norwegian government has almost quadrupled the offer as only 28 blocks in total were added to the APA the previous year. According to official Norwegian estimates, the Barents Sea may contain two thirds of the oil and gas still to be discovered off the Norwegian coast.  With rising hydrocarbon prices, oil and gas investments become more profitable as some of these explorations can be very costly, but if prices for the sale of black gold and gas are high, the investments are more profitable.

The EU's decision to cut off hydrocarbon trade relations with Russia has made the EU-27 look to neighbouring countries that can sell oil and gas to Russia. Norwegian Minister of Petroleum and Energy Terje Aasland said in January: "Facilitating new discoveries in the north is important for Europe, the country and the region. The Nordic country provides 20-25% of the European Union's gas. Norwegian natural gas exports through pipelines to Europe were 116.9 billion cubic metres of gas (BCM) in 2022, almost reaching the 2017 record year of 117.4 BCM. The largest increase in exports was to Germany, which received about 54.8 BCM of gas, an increase of 11% over the previous year.