The giant Norwegian oil fund and Norway’s relatively low oil dependence to balance the budget is highlighted as the two central reasons.
– Norway seems to possess one of the best positions of all manufacturers, writes the Financial Times in the analysis.
It is made on the basis data from ratings agency Fitch and Citi Research.
Oil prices have fallen since last summer’s peak of $ 115 a barrel to the current level of around 60 dollars. It has major consequences, both Norway and other oil-producing countries and countries which import oil.
$ 40 a barrel
Norway’s oil wealth is the last 15 years pushed into the Government Pension Fund – Global, or oil fund. It currently has an estimated value of 6.300 billion. Wealth is a future pension, but can also be used to stimulate the economy in hard times. It gives Norwegian authorities wide leeway.
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also shows several analyzes that Norway does not need an oil price of more than $ 40 a barrel – far below even the current relatively low level – to balance the budget. Also Fitch has landed on this number.
– This is the lowest level for all oil producers rating agency has seen, writes the FT.
Other countries are far worse off: Iran needs an oil price of $ 135 a barrel, Russia and Venezuela 105 114.50, according to Fitch.
BI professor and NUPI researcher Ole Gunnar Austvik told E24 that one should plan on a lower price for a good while. unless China moves.
– The world economy is not exactly strong and weaker growth in China contributes to the demand for oil is much lower now than previously. I think we are moving into a phase where prices will be lower than they have been over the last year.
Can have consequences
Yet Governor Øystein Olsen worried that an oil price of” 70- $ 80 per barrel will have relatively large consequences “for the Norwegian economy, according to Central Bank’s latest Monetary Policy Report.
This is because low oil prices may have a significant impact on Norwegian oil investments, like everything in 2015 is growing decline.
– Sustained lower oil prices will increasingly affect the profitability of new potential development projects on the Norwegian continental shelf and thus provide greater effects on oil investments, says Olsen.
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Financial Times points out that especially oil projects in the Arctic now be shelved.
Oil Investments has for many years been an important growth driver in Norwegian economy, but now pointing more arrows down.
DNB Markets concluded in November that 7,000 jobs have disappeared in the oil industry in the past two years. So far this year only one development plan submitted to the MPE.
It happened last week.
We also believe many that the development of the giant field “Johan Sverdrup” will give renewed activity and optimism in Oil Norway when it gets going.
Sverdrup will be developed in several stages, and the first phase will be ready for production by the end of 2019. The expansion is expected to cost between 170 and 220 billion, and Statoil has indicated that the project could create up to 51,000 FTEs.
“Johan Sverdrup” has an breakeven price way down 35-40 dollars a barrel to be profitable, which puts it in a unique position on the Norwegian shelf.
For comparison: “Johan Castberg» in the Barents Sea has a breakeven price of between 85 and 90 dollars a barrel.
Taper income
Specifically also causes the sharp drop in oil prices to Norway losing revenue. However, this will not be known other than that the oil fund grows a bit slower.
– The fall in oil prices to current levels reduces Norway’s revenues by over 70 billion next year, said Finance Minister Siv Jensen (FRP) financial debate on 1 December.
Since oil prices have fallen further. DNB Markets estimates that current oil prices will provide 84 billion less in revenue for Norway next year.
The arrows pointing slightly downward Norwegian economy next year, but most analysts believe in a soft landing with economic growth still wage growth and low unemployment.
However, Norges Bank decided in December surprising to cut its key rate to 1.25 percent, despite the fact that the housing market is still searing.
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