Norway's oil stimulus nears the tipping point

A near half-decade boom in oil investments in Norway is about to come to an end, sapping momentum in the economy of western Europe’s largest crude producer, the country’s main economic forecaster said.

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“The big change next year is investment in the petroleum industry because we have reached the highest level, it’s peaking next year,” Hans Henrik Scheel, director general of Statistic Norway, said yesterday in an interview at his Oslo office. Oil investment will stabilize at a high level and the “demand impulse will be there but not a growth impulse,” he said.

Scandinavia’s richest nation has used its oil wealth, which it funnels into an $850 billion sovereign wealth fund, to save itself from the wave of recessions that tore through most of the rest of Europe. Yet that’s left Norway’s economy reliant on fossil fuels and with weakened competitiveness. Statistics Norway yesterday cut growth forecasts in the mainland economy, which excludes oil and gas, through 2016 as investments and record consumer debt weighs on households.

Statoil, Norway’s biggest oil producer, said last month it would cut planned investments by 8 percent over the next three years as the stagnant price of oil weighs on cash flow.

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