Cost overruns and the subsequent performance of developments on the Norwegian Continental Shelf : how have oil and gas field developments with large cost overruns in investments on the Norwegian continental shelf performed over time?

Abstract

This report provides an analysis and evaluation of how oil and gas field developments on the Norwegian continental shelf perform over time, after occurring significant cost overruns in initial investments. The analyses are mainly quantitative, and methods used include calculation of net present values, internal rates of return, and break-even prices of the licences. The report then looks into how these have developed over the lifetime of the developments. Other analyses, such as variance analyses, were used to look at how different factors affected the deviations from PDO and the change in net present value. The results of the licenses analyzed show that they manage to keep a positive NPV, but longer production time causes lower internal rates of return for three of the fields, and higher break-even prices for all of them...