Norway Implements Offshore Oil Production Cuts To Support OPEC+
Norway’s Ministry of Petroleum and Energy will cut the country’s offshore oil production to help stabilize the global market.
The government took the decision to support recent reductions announced by the OPEC/OPEC+ nations.
Although Norway – which accounts for around 2% of global oil production – is not part of that co-operation, the government decided to act to help ensure energy market stability.
In June, Norwegian output will come down by 250,000 b/d to 1.609 MMb/d and by 134,000 b/d to 1.725 MMb/d during the second half of 2020. In addition, start-up of various offshore fields will be delayed until 2021.
These measures mean total Norwegian production in December 2020 will be 300,000 b/d less than originally envisaged. The regulation will cease by the end of the year.
Cuts will be distributed between individual fields and implemented by granting revised production permits to the affected fields. Oil companies involved will be consulted before revised six-month production permits (from July 1 to Dec. 31) are granted.
Gas and condensate fields are exempt from the measures, so Norwegian gas production and gas exports should not be affected. Also exempt are fields on the median line with other countries and other fields with problems related to resource management, including those in a late tail-end production phase.
The Ministry said Norway’s oil is produced with relatively low production costs. If global oil storage fills up, this might also affect resource management on the Norwegian continental shelf.
This is the first time Norway has joined oil production cuts since 2002. Then, Norway reduced its production rate by 150,000 bpd over the first half of the year, after oil fell below $20 a barrel following the 9/11 terrorist attacks.