OSLO: Norway's oil and gas investments, a key economic growth factor, will fall sharply in 2015, an official survey showed on Thursday, increasing chances that the central bank will keep interest rates low for an extended period.
Investments in the Norwegian continental shelf (NCS) were expected to come in at 182.4 billion crowns ($30.39 billion) in 2015, a 12 percent drop compared with the initial estimate for 2014, published in June last year, and the lowest comparable level since 2012.
The preliminary figures, compiled from oil firms by Statistics Norway, are expected to grow somewhat as companies update their plans later, but the analysts said they were already pointing to lower economic growth.
"This is a significant draw-down on Norwegian growth and suggests a lower interest rate path," Nordea Markets economist Joachim Bernhardsen said of the 2015 investment plans.
The Norwegian crown currency weakened slightly against the euro after the data release, but later recovered.
The global oil industry has cut its plans for capital expenditure in order to preserve cash for dividends and prevent a fresh spiral of cost inflation.
DNB Markets economist Kyrre Aamdal said the survey data clearly indicated that Norway had reached a peak in oil investments, and that the economy would take a hit from a negative development in 2015.
"Today's figures support the view that the Norwegian economy is not developing so well, and the central Bank my have to cut its growth forecast," he said.
The decrease in planned investments came mainly due to significantly lower estimates for field development and for bringing fields onstream, the statistics agency said in a statement.
The drop could be smaller if Statoil presents a $20 billion development plan for the giant Johan Sverdrup oilfield by the end of this year, but investments in the giant field, due to come on stream in late 2019, will still be limited next year.
The latest investment figure for 2014 was revised slightly up to 231.7 billion from 223.7 billion crowns, partly due to higher exploration spending.
Norway's oil production peaked in 2000, and current output is less than half that year's level.
The International Monetary Fund called on Norway in May to cut back on the spending of its oil income, saying the government should focus on fostering private sector growth instead as it begins the long transition to life after oil.
The IMF said it expected Norway's mainland economy, which excludes the oil sector, to grow at 2.4 percent versus the central bank's 2.5 percent.
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