Norway joins oil production cuts for first time since 2002

Bloomberg

Norway, western Europe’s biggest oil producer, joined international efforts to curb supply for the first time in almost two decades after prices plumbed new depths.
The Nordic country will cut production by 250,000 barrels a day in June and 134,000 barrels in the second half of the year, the Petroleum and Energy Ministry said. That’s based on a reference daily production of 1.86 million barrels that accounts for the giant Johan Sverdrup field’s outperformance.
It’s the first time Norway is a part of coordinated international efforts to cut output since 2002, a sign of how brutal the market rout is for producing nations that are simultaneously grappling with the coronavirus pandemic. The oil market has descended into chaos despite this month’s Opec+ agreement to reduce production by a record, with US prices going into negative territory for the first time and the North Sea Brent benchmark falling to more than 20-year lows.
“We are currently facing an unprecedented situation in the oil market,” Petroleum and Energy Minister Tina Bru said in the statement. The decision “has been made on an independent basis and with Norwegian interests at heart,” she said.
Norway isn’t a part of the Opec+ deal, but had said it would consider a unilateral cut to help the broader effort to stabilise markets roiled by a plunge in demand because of the coronavirus pandemic. The country’s oil industry and the government’s income from production are suffering badly from the rout, and Norway is expected to withdraw record amounts from its sovereign wealth fund to cover emergency spending this year.
Norway produced 1.68 million barrels of oil in March, or less than 2% of the world total. The country’s output is rising this year and was set to increase further thanks to Sverdrup, which started in October.
The ministry’s reference production is based on information provided by companies. It’s been adjusted for the delay of maintenance halts due to the coronavirus and for higher-than-expected production from Sverdrup, which reached maximum capacity of 470,000 barrels a day in April, Lundin Energy AB said on Thursday.