That view is expressed by oil analyst Thina Saltvedt at Nordic investment bank Nordea Markets, who spends her days measuring risk and uncertainty.

Unforeseen events can hit the petroleum sector in a number of ways, and the industry is used to dealing with cyclical developments created by supply and demand changes.

This is a fairly familiar risk, but few people nevertheless thought in 2008 that dawning US shale production would reach such big volumes and thereby have such a strong impact on prices.

The latter fell by up to 60 per cent in the space of a few months during late 2014 and into 2015, creating panic in the market. The result has been cost cuts and mass redundancies, particularly in the supplies segment.

Saltvedt notes that today’s crisis stands out because the change has primarily been driven by the supply side rather than demand, as was the case in 2009 after the financial crisis.

“Oil prices are unlikely to bounce back any time soon,” she says. “Shale production in the USA is resistant because many fields are ready to come on stream as soon as prices reach a certain point.

“That’s unlike the position on the NCS, with its much longer investment time frame. Output from a US shale discovery reaches the market quickly.”


She argues that the long-term approach required to operate on the NCS has helped to strengthen the downturn in Norway.

“The willingness to invest has fallen as a result of the uncertainty associated with the upheaval on the supply side.

“High costs, which have risen in line with oil prices since 2002, combined with declining investment will force through an important restructuring.

“The only answer is a robust industry which can compete even with low-cost producing countries such as Iraq, Iran and Venezuela.”

Saltvedt emphasises that maintaining cost reductions and efficiency improvements will be important even if oil prices were to rise again.


Although change cannot be avoided, she warns the companies against overly short-term thinking – and sees dangers related to safety work, social responsibility and recruitment to the industry.

“The companies must appreciate that they have a corporate social responsibility. A major accident like Macondo in the Gulf of Mexico affects large sections of society and the environment.

“It should be fully possible for the industry to think in terms of safety while also enhancing efficiency.

“We’re in a vicious circle at the moment, characterised by high pay and lack of expertise in boom times. Competent staff are then shed as soon as prices fall. The result is instability.”

Saltvedt notes that young people are turning their backs on oil-related subjects at school. “Those who’re coming up for retirement now have nobody to hand over to.

“That could lead to a change of generations which has a negative impact for both production and safety work on the NCS.”


The Barents Sea was identified before the price slump as the next big development province off Norway, but the commerciality of several discoveries in these waters is now very uncertain.

“More demanding natural conditions there make bigger demands on field size and technology,” Saltvedt observes. “Profitable projects depend on an expansion of infrastructure in the region.

“Nevertheless, we’re now seeing signs of declining costs in the Barents Sea because the companies and the supplies industry are collaborating on efficiency enhancements and standardisation.”


Saltvedt also sees long-term uncertainties in the oil market. She believes that the green transformation will occur quickly, and that people are not fully aware of coming technological changes.

High oil prices have made it profitable to invest in alternative energy, and she says the transformation in the transport sector will have the biggest impact on the market.

“A key reason why prices rose so much over such a long period is precisely that competitive alternatives have not been available in this area.

“We now see that the development of battery technology for electric cars, in particular, has been faster than expected. We’re six years ahead of forecast progress, and this will only speed up even further.

“The oil companies must appreciate that they’re going to face competition in the energy market at an earlier stage than had been priced in by the market before the downturn began. It’ll be very interesting to see which of them can manage the transition.”