Norway’s oil and gas firm Aker BP approved plans to invest $19 billion in developing new projects offshore Norway by 2028, raising its initial capital expenditure plan by 20%, mostly due to cost inflation.

 

Oil and gas operators offshore Norway have ramped up production and project developments in recent months as they look to supply more oil and gas to Europe in the absence of Russian energy supply. However, costs are rising due to inflationary pressures, and capital expenditure plans are being adjusted higher.

Aker BP’s share of the investments in the projects NOAKA, Valhall PWP-Fenris, Skarv Satellite Project, and the Utsira High projects will be $19 billion between 2023 and 2028, the company said on Friday.

The investment is 20% higher than what Aker BP planned for those projects in August this year.

“General cost inflation is a key part of this capex increase,” a spokesman for Aker BP told Reuters, without giving details.

Last week, Norway’s energy giant Equinor said it would invest the equivalent of $1.44 billion with its partners in developing the Irpa gas field north of the Arctic circle in the Norwegian Sea and export the gas to Europe. Irpa is expected to begin production in the fourth quarter of 2026 and produce gas until 2039, according to the field development plan submitted to the Norwegian authorities.

Natural gas production in Norway, which supplies around 25% of the gas consumed in the EU and the UK, is expected to rise by 8 percent in 2022 compared to 2021, the government’s latest estimates showed.

This summer, Norway’s authorities approved applications from operators to boost production from several operating gas fields, to allow higher gas production as its key partners, the EU and the UK, scrambled for gas supply ahead of the winter. The Energy and Petroleum Ministry approved applications from operators on the Norwegian shelf and allowed higher gas production from the Troll, Gina Krog, Duva, Oseberg, Åsgard, and Mikkel fields. The ministry has also granted a production permit for the Nova gas field, which is expected to start up in the near future.