Norway expects the average price of oil to rise next year as demand grows because of improved global economic growth.
Norway, the world"s fifth largest oil exporter, expects the average price of oil to rise next year as demand grows because of improved global economic growth. The price of crude will average 425 kroner a barrel next year, or $70 a barrel assuming an exchange rate of 6 kroner per dollar, the Petroleum and Energy Ministry said today in a statement in connection with the 2010 budget bill. The ministry raised this year"s forecast to 375 kroner a barrel, on average, from a May forecast of 350 kroner a barrel.
?With an improved economic outlook, oil demand is expected to grow into 2010,? the ministry said. ?Together with continued constraints on OPEC production, this gives reason to expect a tighter market balance and firmer oil prices.?
Oil output in Norway, which isn"t a member of the Organization of Petroleum Exporting Countries, peaked between 2000 and 2001. Production, including natural-gas liquids and condensate, will fall 7 percent to 2.3 million barrels a day this year, unchanged from a May forecast, the ministry said.
Norway, and state-controlled StatoilHydro ASA, is raising natural gas output as crude resources dwindle. Production of total saleable gas is expected to rise 7 percent to 103 billion cubic meters this year, little changed from the May forecast.
Norway ranks behind Saudi Arabia, Russia, the United Arab Emirates and Iran in oil exports and is the world"s second- largest gas exporter after Russia. The net cash flow to the state from the oil and gas industry is estimated at 265 billion kroner this year, or about 26 percent of the government"s income, the ministry said. The net cash flow is expected to fall to 220 billion kroner in 2010.
Petroleum investments, including spending on exploration, will increase by 7 percent to 135 billion kroner this year from last year, the ministry said. Investments are expected to remain ?at a high level? in coming years, the ministry said.
The International Energy Agency increased its global consumption forecast for a third month in October, saying oil demand is likely to average 86.1 million barrels a day next year, 350,000 barrels a day more than estimated in September. The Paris-based group said that an improved economic outlook from the International Monetary Fund and higher-than-expected consumption in Asia and the Americas were the reason for the revision to the demand forecast.