Slump in Norwegian oil industry set to hit Danish subcontractors

Dropping oil prices means less investment in sector in 2015

Investment in the Norwegian oil and gas sector is set to fall by 13 to 16 percent in 2015, largely due to the plummeting price of oil on the international market. This will also have an impact on associated industries in Denmark, the metal workers’ trade publication Jern og Maskinindustrien reports.

While a barrel of oil cost 100 US dollars in August, the erstwhile ‘black gold’ now fetches just 55 dollars. Knut E Sunde, the head of the Norwegian business interest organisation Norsk Industri, told the paper that the effects can already be felt. “The market’s getting smaller,” he said.

“This can also affect Danish suppliers. We are worried.”

Martin Næsby, the head of the oil and gas trade organisation Olie Gas Danmark, is also worried about the prognosis. “A falling level of activity in Norway is likely to hit Danish subcontractors as well,” he noted.

“That can be advisors, manpower and supplliers of hardware.”

More worrying: exchange rate
Christian Eskelund-Hansen, of the Danish industrial advocates Dansk Industri, told Jern og Maskinindustrien that he was less concerned for the Danish subcontractors. “We need to remember that the sums that will be invested are still enormous,” he said.

Eskelund-Hansen emphasised though that, while he didn’t expect the Danish firms operating in Norway to be wiped out by the fall in investment, he expected a concurrent drop in the strength of the Norwegian krone to have an impact on earnings for Danes operating in the country.

The Norwegian krone has been falling since the beginning of 2013. At that time 100 Norwegian kroner bought about 102 Danish krone – now it gets just 82.

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