[ad_1]
Norway follows countries like Saudi Arabia and Russia and reduces oil production to stabilize an oil market affected by the crisis. – It doesn’t mean anything to the oil market. But it is dawn and it is important to contribute, says the oil analyst.
REDUCE PRODUCTION: The Minister of Oil and Energy, Tina Bru, participated in several meetings with other oil-producing countries in early April. Now she has chosen to do several of them: cuts in oil production.
Terje Pedersen
published:,
On Wednesday, the Ministry of Oil and Energy announced cuts in Norwegian oil production of 250,000 barrels per day in June and 134,000 barrels per day in the second half of the year. In addition, the start of production in various fields will be delayed until 2021.
The cuts come after the OPEC oil cartel, with Saudi Arabia at the helm, and partner countries like Russia (Opec +) in early April agreed to cut production from May 1 to save a struggling oil market.
This is due to a reduction in oil demand due to the corona virus, which has occurred in an already flooded oil market. The situation has sent the price of oil in the basement this year.
Also read
Analysts expect Corona measures from Subsea 7: – Enough to make big cuts.
– It doesn’t mean anything to the oil market
Oil analyst Helge Martinsen at DNB Markets notes that the effective cuts are much lower than what is presented, and calls the Norwegian cuts “headline cuts.”
It has calculated that the effective cuts are 30,000 barrels per day in June and 50,000 barrels per day in the second half of the year.
– The conclusion is simple, it does not mean anything to the oil market. But it is a good day and it is important to contribute, says Martinsen.
Less than half of the Norwegian oil cut comes from fields currently in production. Most of this comes from new fields that are exposed to 2021. In March, 4.4 percent less oil was also produced than the forecast by the Norwegian Petroleum Directorate.
The Minister of Oil and Energy, Tina Bru (H) explains in a press release the cuts that the oil market is now facing in an extraordinary situation.
– We have previously said that we will consider a cut in Norway if several large producing countries reduce enough. The government’s decision to reduce Norwegian oil production was made independently and to safeguard Norwegian interests, says Bru.
– The gas field is exempt
The Ministry is based on a production of 1,859,000 barrels per day and, therefore, the cuts of 250,000 will constitute just under 13.5 percent of total production.
In March, 1,682,000 barrels per day were produced on the Norwegian continental shelf, which is 4.4 percent lower than the forecast by the Norwegian Petroleum Directorate.
“A cut of 250,000 barrels per day in June 2020 provides an upper limit for oil production from the Norwegian shelf of 1,609,000 barrels per day in June. A cut of 134,000 barrels per day in the second half provides an upper limit for the average oil production of the Norwegian shelf during the second half of 1,725,000 barrels per day, “says the press release.
The cut will be distributed to individual fields and will be implemented by issuing revised production permits, the ministry writes.
– This will result in a production limitation for oil companies that have interests in the oil fields. The gas fields are exempt, so the cut will not affect Norwegian gas production or gas exports, Bru says.
E24 has been in contact with the Oil and Energy Ministry on Wednesday night, who does not want to comment on the cuts beyond what is stated in the press release.
