Exploration on the Norwegian continental shelf (NCS) is highly profitable. Over the past 20 years, capital invested in exploration has generated a fourfold return.
This is documented in analyses carried out by the Norwegian Offshore Directorate in its work on the Resource Report. The report is published on sodir.no every two years, most recently in 2024. The next report will be made available in August.
One of the topics addressed is the profitability of exploration. Exploration on the NCS has always paid off. This applies to all offshore areas. In recent years, the discoveries have been smaller, but the return remains good.
More exploration needed
Much of the exploration has been carried out within proximity of previous discoveries and already developed infrastructure. These are areas where the geology is well known. Discoveries close to existing infrastructure are easy to develop via subsea tie backs. This in turn enables high profitability, extended infrastructure life and favourable revenues for the companies and the state.
The first well
- This summer marks 60 years since the Ocean Traveler rig drilled the first wildcat well on the Norwegian continental shelf.
- Although the well was dry, it was in many ways the first decisive step into the petroleum era.
- Approximately one fifth of the economic value added to the Norwegian economy comes directly from oil and gas activities.
- More than 200 000 people are directly or indirectly employed in the petroleum industry. This corresponds to approximately 10 per cent of private sector employment in Norway.
- To slow down the decline in production, it is important that the companies continue to explore, both close to existing infrastructure and in underexplored areas.
In the longer term, exploration close to existing infrastructure is not sufficient to halt the decline in production on the NCS. Exploration is needed in less mature areas of the shelf. Whilst this may entail greater risk, it can also lead to larger discoveries.
The Government favours an active exploration policy. Access to new exploration areas is crucial to making new discoveries and maintaining value creation, employment, government revenues and exports in the long term.
Organisation of exploration activities on the Norwegian continental shelf
- The licensing system on the NCS is state-governed and gives oil companies the right to explore for and produce oil and gas. The system is established under the Petroleum Act, and the resources are state-owned. Read more: Licensing rounds - The Norwegian Offshore Directorate
- Awards in predefined areas (APA) is a scheme to maintain exploration and production in mature areas of the shelf, by giving the companies regular access to familiar and available acreage. Read more: APA 2026 - The Norwegian Offshore Directorate
- The petroleum tax system in Norway is designed so that companies pay tax on profits, and receive a deduction for all relevant costs, including exploration costs. Read more: Petroleum tax - Norskpetroleum.no
The letter of allocation (Norwegian only) from the Ministry of Energy to the Norwegian Offshore Directorate states: 'In order to accomplish our goals, the petroleum policy must also ensure that the potential in existing fields and infrastructure is fully exploited, and that all profitable discoveries are developed.'
Large resources remaining
Norway still has large oil and gas resources on the shelf. These can provide a basis for production, exports and value creation for society for many years to come. Such a development requires continued exploration and increased investments in fields, discoveries and infrastructure. A lack of investment can result in a rapid downsizing of the petroleum industry.
Want to know more about the profitability of exploration? More information and updated figures will be available in the Resource Report 2026 in August.
Read more about the history of exploration
- 60 years since the hunt for oil and gas began - The Norwegian Offshore Directorate
- Some of the wells that made a difference - The Norwegian Offshore Directorate
- Klarsyn i undergrunnen - Sokkeldirektoratet
Source: Norwegian Offshore Directorate
