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Norway's crude oil production fell much faster than earlier
expected in June, but based on data by IHS Markit Commodities at Sea,
crude oil shipments returned closer to normal levels in July.
Exports reached an average of 1.33 million b/d in July, around 20%
up vs June's levels. Output from Norway remains much higher than a
year ago, driven by the addition of the giant Johan Sverdrup
oilfield, which started exporting in late October 2019. 350,000
barrels per day have been shipped in July, marginally lower than
the previous month. This new field of 2.7 billion barrels has
rejuvenated Norway's oil production. It was originally discovered
in 2010 but came on stream last year. The country's oil production
reached 2.1 million b/d in April, but dropped to 1.54 million b/d
in June, below the country's target of 1.73 million b/d set by the
Norwegian government.
The country's oil income is sharply affected this year due to
weak crude oil prices. Europe's largest oil producer (excluding
Russia) is heavily exposed to the oil industry, which accounts for
about a fifth of the country's revenue. The government has adjusted
its forecast for net cash flow from the oil industry to 97.8
billion NOR crowns for this year, down from the October's
prediction of 245 billion NOR crowns. 2021 cash flow is expected to
only reach 116 billion NOR crowns. Measures taken such as temporary
tax relief could boost oil firms' liquidity by as much as 100
billion NOR crowns over next couple of years. Norway agreed to cut
its oil output from June until December, by 250,000 barrels a day
in June and 134,000 barrels in the second half of the year.
Norway has delayed the start-up of production at several fields
until 2021. This means that the country's total production in
December 2020 will be around 300,000 barrels less per day lower
than originally planned. The cut will include oil fields on the
Norwegian Continental Shelf, being well distributed between the
fields and different companies involved.
Meanwhile, Neptune Energy recently announced this year's largest
oil discovery in Norway, at its Dugong well (PL882) in the North
Sea. Estimates suggest volumes in the range of 6.3 - 19.0 million
standard cubic meters (MSm3) of recoverable oil equivalent, or 40 -
120 million barrels of oil equivalent (boe). Dugong (PL 882) is
located 158 kilometers west of Florø, Norway, at a water depth of
330 meters, very close to operating production facilities. Two
reservoirs are involved, at a depth between 3,250 - 3,500 meters.
Other new oil discoveries in the country include Aker BP's
Liatarnet, at 80 million - 200 million barrels, and Bergknapp by
Germany's Wintershall, estimated at 26 million - 97 million
boe.
Focusing on North Sea's total crude oil loadings, activity is
expected to hit this year's record low in September. Most recent
loading schedules suggest exports will drop to 1.61 million b/d in
September. This will be the lowest since October 2019. Loadings of
the 12 main grades loaded in North Sea are expected to drop 16%
compared to August. The decline will primarily be driven by
maintenance shutdowns. Johan Sverdrup loadings are not expected to
surpass 300,000 barrels per day in September. Only 15 Aframax-sized
cargoes of the grade are scheduled to load next month. Loadings of
Troll Blend scheduled are around 40% down in September.
