Norway: Oil Minister assures that $40/bbl can’t last for long

Oil prices have decreased to the lowest level since 2009 indicating that the world oil glut will continue. Most of OPEC member countries are sustaining their production, and the U.S stockpiles are almost 100 MMbbl above the five- year seasonal average.

 

“Oil Price at $40 can’t last for long, and prices will have to rise as supply drops out of the market”, said Tord Lien, Norway’s Oil Minister. “But we will have to adjust to lower oil prices, and it’s important for Norway to make the adjustments and prepare for a lower price-range than we were getting used to” Lien added.

 

Norway is a key oil exporter to European economies, and the weak oil prices adversely affects Norway’ economy. The government said its economy, as measured by gross domestic product (GDP), was weakened because of the depressed oil market. The weak trend is particularly seen in industries relating to the petroleum industry.

 

Falling investments combined with a slump in oil prices are proving severe effects for Norway’s economy, with almost half its exports related to petroleum. Crude producers and service companies have cut thousands of jobs, sending fluctuation through an economy where one in nine jobs depends on oil.

 

Norway oil production in July 2015 was 1.56 million barrels per day according to the Norwegian Petroleum Directorate (NPD). Norway set a goal of adding 5 billion barrels of oil to its reserves, and expects to start production from its fifth largest discovery ever made on the Norwegian continental shelf “Johan Sverdrup field” by 2019.

 

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