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NORWAY DATA: Oct oil output remains below ceiling, no cut extension planned

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NORWAY DATA: Oct oil output remains below ceiling, no cut extension planned

Highlights

Norway's voluntary output cuts not seen extending into 2021

Country over-complies with self-imposed cuts in Sept-Oct

Sverdrup boost keeps production well above 2019 levels

London — Norway has no plans to extend its voluntary oil production cuts into 2021, the petroleum and energy ministry said Nov. 23, as latest statistics showed crude production levels recovered in October, but were still well below the country's self-imposed ceiling.

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A statistical release from the Norwegian Petroleum Directorate showed the country's crude production in October rose 8.5% month on month to 1.61 million b/d, while overall liquids production rose 6% to 1.88 million b/d, after output took a hit in September from elevated levels of maintenance, technical glitches and a 10-day strike that began at the end of the month. The statement noted that October production had also been affected by the strike, as well as maintenance stoppages, which intensified with the easing of coronavirus-related restrictions.

In April, Norway announced voluntary production cuts running from June through to the end of the year to help stabilize the market in response to collapsing demand, without formally signing up to join the OPEC+ producers group led by Russia and Saudi Arabia.

The Norwegian production cuts "apply to the end of 2020. There are no plans to extend the regulation period," a spokesman for the petroleum and energy ministry told S&P Global Platts Nov. 23.

The comment came as OPEC+ producers prepare for an online meeting at the end of this month expected to include discussing the possibility of maintaining cuts at current levels into 2021.

The latest statistics show Norwegian crude production was more than 100,000 b/d below the government's output ceiling in October, and more than 200,000 b/d below the ceiling in September, after being at the ceiling in August and slightly overshot in July by 13,000 b/d.

The ceiling for the second half of this year is set at 1.725 million b/d, and does not apply to liquids from gas fields.

Sverdrup support

More positively in production terms, Norway's oil output has remained above 2019 levels in every month this year, thanks largely to the giant Johan Sverdrup field, which came on stream in October 2019 and recently hit the operating company's upwardly revised production forecast for the first phase, of 470,000 b/d. Sverdrup crude, which is heavier than more typical North Sea grades, has found reasonable demand in East Asian markets of late.

Overall liquids production in October was up 4.7% year on year, while crude production was up 8.3%.

State-controlled Equinor announced Nov. 18 that it was again raising the Johan Sverdrup first-phase production target, to 500,000 b/d, which it expects to hit by year-end, with the second phase, due on stream in the fourth quarter of 2022, expected to lift production to 720,000 b/d.

It added that first-phase production could go higher than 500,000 b/d in the middle of next year due to water injection enhancements.

The field already accounts for a quarter of Norway's oil production, and approaching a fifth of total North Sea oil production, and has helped offset technical problems that were starting to become evident at older Norwegian facilities.