Scandinavian Working Papers in Economics

UiS Working Papers in Economics and Finance,
University of Stavanger

No 2016/10: Cost performance on the Norwegian continental shelf

Sindre Lorentzen and Petter Osmundsen ()
Additional contact information
Sindre Lorentzen: UiS, Postal: University of Stavanger, NO-4036 Stavanger, Norway
Petter Osmundsen: UiS, Postal: University of Stavanger, NO-4036 Stavanger, Norway

Abstract: The oil and gas sector plays a crucial role in the Norwegian economy. It accounts for a very large proportion of gross domestic product, government revenues, investment and exports. A sharp fall in oil prices has had a significant impact on the economy and focused great attention on the cost side of the sector. Enhancing cost efficiency and curbing cost overruns now top the agenda. It is not difficult to find examples of projects suffering extensive cost overruns. What factors underlie these overruns? Media coverage might easily give the impression that Norway’s oil and gas sector is suffering from a lack of ability and competence to plan and execute projects to budget. Is this reputation deserved? Does the oil sector perform more poorly in Norway than in other producer nations? Can we see learning effects? How do the Norwegian and the international oil industry compare with other industries with respect to cost performance?

Keywords: cost overrun; petroleum industry; experience; comparison

JEL-codes: D22; D24; G31

15 pages, October 17, 2016

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