Authorities will cut Norwegian oil production by 250,000 b/d in June, and by 134,000 b/d in this year’s second half help hasten the oil price recovery following a steep, sudden drop in oil demand.
A “more rapid stabilization of the oil market” than the market mechanism alone could ensure was considered important for sound resource management and the Norwegian economy at large, according to a Norwegian Petroleum Directorate statement Apr. 30.
The Norwegian Petroleum Directorate assisted the Ministry of Petroleum and Energy in its work on the production regulation.
In addition to the production cuts, said Minister of Petroleum and Energy Tia Bru in a statement, start of production on multiple fields will be postponed to 2021. “Overall Norwegian production in December 2020 will amount to 300,000 [b/d] lower than the companies had planned. This regulation will cease at the end of the year.”
The cut will be distributed across individual fields and will be carried out by issuing revised production permits. Companies will be consulted before revised production permits are issued.
This cut is based on a reference production of 1,859,000 b/d of oil. A cut of 250,000 b/d in June 2020 thus yields an upper limit for oil production on the Norwegian shelf of 1,609,000 b/d in June.
A cut of 134,000 b/d in the year’s second half will yield an upper limit for average oil production from the Norwegian shelf during that time of 1,725,000 b/d.
Cuts apply to Norwegian oil production, thus, some fields—including gas and condensate fields, transboundary fields, and mature fields in a late phase—are exempt.