OSLO — Norway, one of the world's leading exporters of oil and gas, on Thursday slashed its oil reserve estimates after disappointing drilling results, while production dropped 10 percent in 2010 on a yearly basis.
The estimated undiscovered -- or unproven -- reserves have fallen 21 percent from 3.3 to 2.6 billion standard cubic metres of oil equivalent, or from 20.8 billion barrels of oil equivalent (boe) to 16.4 billion boe, compared with 2006, the Norwegian Petroleum Directorate (NPD) said in its annual review.
Proven reserves have meanwhile slumped from 5.2 to 4.8 billion standard cubic metres of oil equivalent, it added.
"Production is declining in spite of vigorous (prospecting) activity. Not enough new reserves are found to offset current oil and gas production," the NPD said.
The NPD said that the discovery of proven reserves holding some 400 million standard cubic metres of oil equivalent over the past five years had contributed to the downward revision.
But the drop is also linked to "disappointing drilling results" in deep-water areas of the Norwegian Sea considered to be representative of the Scandinavian country's continental shelf reserves, it said.
And with no major new discoveries, the proven reserves declined as oil and gas from them was pumped up.
"Not enough new reserves are found to offset current oil and gas production," the NPD said.
Norway's reserve estimates do not include potential fields around its Arctic Jan Mayen island, where prospecting has yet to be approved, nor a Barents Sea section handed to Norway in a maritime border agreement with Russia last year that is awaiting parliamentary ratification in both countries.
The latter especially is believed to hold vast oil and gas reserves.
Norway's actual oil production is also on a downward slope, the directorate's figures showed.
Last year, the country pumped up an average of 1.8 million barrels per day, down 10 percent from 2009, the NPD said.
Production was expected to tumble further this year to average of 1.7 million barrels per day.
NPD chief Bente Nyland on Thursday called on oil companies to develop new technologies to allow them to increase their resource recovery rate from oil and gas fields from today's level of below 50 percent.
"The fact that the companies on the Norwegian shelf are not able to achieve maximum exploitation of our fields poses a challenge," she said in a statement.
"Although our recovery rate is among the best in the world, we are still not satisfied," Nyland said.
"If we manage to recover just one percent more, this would mean revenues in the hundreds of billions (of kroner, or tens of billions of euros/dollars) for Norway," she said.
Norwegian oil companies would invest a record 150 billion kroner (nearly 20 billion euros, 25 billion dollars) this year, Nyland said.
Norway's output of natural gas will offset the decline in oil production, accounting for 51 percent of sales in the sector by 2015 from 46 percent last year, the NPD said.
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