Norway faces 1.9 million boepd production shortfall by 2040 without major discoveries

For more than half a century, Norway’s oil and gas production has been underpinned by a handful of very large discoveries, the last of which, Wisting in the Barents Sea, was made more than a decade ago. Since then, exploration on the Norwegian Continental Shelf (NCS) has increasingly focused on smaller finds close to existing infrastructure, allowing operators to bring new volumes online faster and at lower cost. While this approach has helped sustain production in the near term, it will not be enough to arrest the NCS’s projected decline through to 2040. Rystad Energy's base-case outlook indicates that production will fall short by 1.9 million barrels of oil equivalent per day (boepd) by 2040, highlighting the scale of the challenge facing the country's upstream sector.

The outlook could deteriorate further if exploration activity does not increase. If exploration volumes over the next decade remain at the same level as the previous ten years, the production gap in 2040 would reach 2.2 million boepd. Halving the time taken to bring discoveries into production under the same exploration assumptions would reduce this to 2.1 million boepd, demonstrating that faster development alone will have a limited impact on the long-term outlook. Even doubling exploration volumes from the previous decade's level, while halving development timelines, would leave a shortfall of 1.4 million boepd. By comparison, Rystad Energy's base-case outlook, incorporating its own exploration assumptions, projects a production gap of 1.9 million boepd in 2040. These scenarios highlight the importance of increasing exploration activity, particularly through wildcat drilling targeting larger, higher-risk prospects away from existing infrastructure. While infrastructure-led exploration (ILX) will remain important for sustaining near-term production, it is unlikely to deliver the volumes needed to reverse the longer-term decline.

The danger for Norway is that it becomes increasingly efficient at finding smaller volumes while losing the ability to replace the large fields that underpin its production base. If this continues, the country faces not only a steep decline in oil and gas output, but also a shrinking pipeline of major projects needed to sustain activity across the NCS. Reversing that trajectory requires operators to take on greater exploration risk and pursue more high-impact prospects capable of supporting standalone developments, rather than focusing predominantly on smaller tiebacks. The government must support this shift by ensuring access to fresh acreage and providing the conditions needed to encourage investment in higher-risk exploration,

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Norway’s challenge is not a lack of resources or the economics of exploration, but its declining ability to make large discoveries capable of sustaining production over the long term. Every offshore discovery exceeding 1 billion barrels of oil equivalent (boe) was made between 1969 and 2010. Since 2016, exploration has yielded around 3.2 billion boe, averaging just 320 million boe annually. At this rate, it would take more than 30 years to discover the estimated 11 billion boe still waiting to be found.

This is despite Norway holding 31.7 billion boe in remaining offshore resources and achieving a 60% exploration success rate, above the global average of 55.5%. The problem is the size of discoveries: each successful wellbore adds around 7 million boe, compared with 18.4 million boe globally. With finding costs close to the global average and Norway’s petroleum tax system covering much of exploration expenditure, the issue is increasingly the size of discoveries rather than the economics of drilling.

The implications extend beyond discovery volumes to Norway’s ability to sustain production. With an average 6.7 years from discovery to first production, exploration over the next two to three years will largely determine which new volumes can contribute before 2035. Recent discoveries have largely been smaller deposits developed through short pipelines, known as tiebacks, to existing infrastructure. While these can be brought online relatively quickly, their production plateaus tend to be shorter. Even at peak production, these discoveries are expected to contribute only around 700,000 boepd, covering roughly a third of the 1.9 million boepd production gap projected by Rystad Energy's base case in 2040. Smaller discoveries can help slow Norway’s production decline, but reversing it will require a return to higher-impact exploration capable of delivering the large fields that have historically underpinned the country’s production base.

Despite the trend towards smaller discoveries, there are early signs of a potential shift in Norway's exploration strategy. Three of the largest operators on the NCS have agreed to collectively drill around five high-impact wells annually over the next five years, pointing towards a greater willingness to pursue prospects that could deliver significant new volumes. The government has also offered 70 new blocks in this year’s Awards in Predefined Areas (APA) licensing round, with awards expected early next year, while a new petroleum white paper is due in 2027, creating further opportunities to reassess the country’s exploration priorities and long-term resource potential. However, translating these developments into a sustained recovery in exploration will depend on whether operators are prepared to commit capital to higher-risk prospects and whether access to new acreage provides sufficient opportunities to discover resources capable of replenishing Norway’s declining production base.

The political backdrop for Arctic drilling has also eased somewhat, potentially supporting exploration in a region increasingly important to Norway’s long-term production outlook. The European Union’s (EU) updated Arctic policy, published on 20 October, maintains its position that Arctic oil and gas should remain in the ground but drops the 2021 call for a multilateral legal ban on new hydrocarbon development and does not target existing production. Norway maintains that the EU’s position does not override its sovereign rights under the UN Convention on the Law of the Sea to explore and produce resources on its continental shelf. This is particularly relevant given that much of Norway’s undiscovered resource potential lies in the Barents Sea, where limited infrastructure means new discoveries would require substantial investment and long-term operator commitment.

Contacts  
Tore Gulbrandsoy
Partner & Head of Stavanger Office
Phone: +47 24 00 42 00
tore@rystadenergy.com

Aatisha Mahajan
Head of Exploration Research
Phone: +47 24 00 42 00
aatisha.mahajan@rystadenergy.com

Kartik Selvaraju
Senior Communications Manager (APAC) 
Phone: +65 8779 4619
kartik.selvaraju@rystadenergy.com

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