Oil production on the Norwegian continental shelf may fall 9.7 % in 2009, declining for a ninth year, the country's Petroleum Directorate said. Crude output will fall to about 110.8 mm cm, or 1.9 mm bpd, in 2009, from about 122.7 mm cm, or 2.11 mm bpd, in 2008, the directorate said in a report. Production will drop to 94.4 mm cm in 2013.
"Between 2009 and 2013 we expect significantly reduced oil production," Bente Nyland, head of the directorate, said in Stavanger. "We expect cost growth to level off or decline next year."

Norway, the world's fifth-largest oil exporter and third biggest natural-gas supplier, pumped its first barrel of oil more than three decades ago in the North Sea. The country is boosting production of natural gas and opening more of its unexplored northern waters to drilling to counter a decline in oil output at maturing fields.
Total petroleum production is expected to fall to 236 mm cm of marketable oil equivalents in 2009 and to about 228 mm in 2013, the directorate estimates. Petroleum production was 242.2 mm cm in 2008, down 8 % from a record in 2004.

A record 56 exploration wells were spudded on the Norwegian continental shelf in 2008, up from 32 in 2007, the directorate said. With almost every other well yielding a discovery, this resulted in a record 25 discoveries, of which four were in the Barents Sea, nine in the Norwegian Sea and 12 in the North Sea, the agency said.
Natural gas output is forecast to rise to 102.9 bn cm in 2009 and peak at 112 bn cm in 2011, the directorate said. Production was 99.3 bn cm in 2008, the agency estimates. Ten new development plans have been submitted to the authorities for approval in 2009, including the Gudrun field, operated by StatoilHydro, and ENI's Goliat field.

Challenge
Norway had an estimated 13 bn standard cm of oil equivalents in petroleum resources at the end of 2008, following an annual gross increase of 39 mm cm, the directorate said. Norway's oil and gas industry invested more than NOK130 bn in 2008 amid record oil prices and rising costs on the Norwegian continental shelf, the directorate said. There's "uncertainty" about what effect the drop in oil prices and the global slowdown will have on investments after 2009, the agency said.
Norwegian fields "have a robust economy at $ 50 to $ 70 a barrel of oil," Nyland said. "Should prices fall below $ 50, without production costs going down, projects may be postponed."

Crude has plunged more than 70 % from a record $ 147.27 a barrel in July as the global recession erodes demand. Nyland said she expected to see consolidation in the Norwegian oil industry in 2009 because of tightening credit and the time-lag in the decline of oil-services costs. This could impact Norway's 20th licensing round, the production licenses for which will be awarded in the spring.
"We do believe there will be consequences from the change in profitability-level on the continental shelf," Nyland said. "We'll see a consolidation in the number of actors. Some companies may withdraw their application."

Source: http://www.bloomberg.com