Norway’s government has raised its budget estimates for oil prices for this year and next because of uncertainty over international supplies.

The government’s Ministry of Petroleum and Energy (MPE) in its new revised budget for this year is based on an oil price of NOK 420/bbl (US $68/bbl), up NOK 70 ($11/bbl) from the original oil price assumed at NOK 350/bbl ($57/bbl) for this year.

For 2007, the MPE has revised its oil price estimate up NOK 50/bbl ($8.1/bbl) to NOK 360/bbl ($58/bbl) from NOK 310/bbl ($50.6/bbl) in the revised national budget.

“Continued high demand for oil, lack of spare production capacity and uncertainty regarding oil deliveries from Iraq, Iran and Nigeria are the main reasons for the higher oil price assumption,” the MPE stated today.

Since 1995 Norwegian oil production has been at a plateau rate of 3 m bb/d of oil but for this year the expectation is that the figure will fall closer to 2.8 m b/d – lower than 2005 - due principally to capacity problems at the Snorre field, a delay in start-up from the Kristin field, and delayed drilling programmes.

By next year oil production is forecast to climb back up to 3m b/d, but decline after 2008.

“Gas sales in 2006 are estimated to [be] approximately 87 billion square cubic metres (scm) (3.072 Bcf),” the MPE said. “In 2005 gas sales were 84.4 billion scm. Over the next years gas sales are projected to increase considerably. In the Revised National Budget 2006 the prognosis is an increase up to a level of 120 billion scm in 2010.

This year is shaping up to be a record investment year, with up to NOK 97 Bn ($15.8 bn) spent on the Norwegian Continental Shelf, including exploration wells, 5% above the National Budget figure with Ormen Lange and Snøhvit accounting for most of the expenditure.

Also state cash flow from the NCS is estimated in the new Revised Budget at NOK 349 Bn ($57 Bn) this year with tax and fees accounting for NOK 210 Bn, ($34.31 Bn) – up NOK 20.8 Bn ($3.39 Bn) from the original budget - while the State’s Direct Financial Interest – which represents government holdings in offshore fields and licences  - is estimated at NOK 126 Bn ($20.5 Bn) while dividends from Statoil account for another NOK 13 Bn ($2.1 Bn).