Norway will be Europe’s key offshore oil and gas destination in the near future with a series of fresh development projects over the next two years driving up the drilling expenditure, reports business intelligence provider GBI Research.
According to GBI’s latest report, offshore drilling expenditure will grow steadily at an Average Annual Growth Rate (AAGR) of 6.9%, from $10 billion in 2012 to $12.8 billion in 2016. Norway will be the primary contributor, achieving an estimated expenditure of $5 billion in 2016, followed by the UK with $4 billion.
Combined, Norway and the UK have already proved themselves to be the European leaders in terms of offshore E&P, along with drilling investments and activity, having consistently represented around 75% of the total offshore drilling expenditure in the European region.
There remain key challenges facing future projects, such as the expected approval of the European Union’s offshore regulations, which are anticipated to lay out much more stringent rules. Compared with land-based installations, offshore exploration involves harsher environments with more operational challenges associated with E&P activity, adding to the complexity of the work.
With the Norwegian Petroleum Directorate (NPD) estimating much larger quantities of undiscovered oil in the Norwegian shelf than previously anticipated, Norway is still proving to have strong potential for offshore drilling investments.