Closing in on the New Year – the effects of the low oil prices on the Norwegian market

A substantial part of Norwegian industry and economy evolves around the offshore, oil and gas industries. In the past, this has helped us keep a quite stable economy through financial and sector-based crises, compared to other western economies. However, many predict that Norway is now heading into a crisis hitting these very industries.

Oil prices dropped drastically in November 2014 and have stayed low through 2015. Affected businesses have experienced severe drops in revenue over a short period of time, and have been cutting costs wherever possible, resulting in a brutal downsizing within offshore and oil related sectors and cancellations of contract obligations and new projects. This has further resulted in an overcapacity in related markets, such as rig supply and seismology. So far, the situation seems contained through an “amend, extend, pretend” approach by the financiers, often being banks, bank syndicates, Eksportkreditt/GIEK (providing Norwegian export credit) and high yield bonds.

However, will these steps contain the situation going forward, or are we merely postponing an inevitable crisis?

It is expected that many businesses within the affected industries will run out of cash in 2016 and 2017, if the oil prices stay low. Bonds are already being traded at levels lower than 50 % of face value, signalling little faith in any immediate market recovery. Several syndicated loans and bond loans mature in 2016 and 2017, and some predict that it will be difficult to raise new capital and credit in markets which by then will likely be in the midst of a crisis.

Few believe in a quick recovery of the oil prices. Though most businesses, especially the larger ones, are expected to manage to stay afloat until the crisis wears off, we will probably see an increased number of restructurings and bankruptcies in Norway over the next two or three years.

Kvale Advokatfirma has the experience and knowledge to assist affected companies, banks, bank syndicates, bondholders and other creditors in refinancing, restructuring and other insolvency issues. Combined with our very strong oil and gas practice we are in a unique position to provide the best possible solution when a crisis hits a participant in the oil and gas industry. You might also find guidance in our publications on Norwegian restructuring and insolvency law, available here.

Partner Stine D. Snertingdalen

Restructuring and Insolvency, Banking and Finance



Kvale has since its beginning been known as one of the best firms in Norway within insolvency and offshore, oil and gas. Kvale’s team of insolvency experts is one of the largest in Norway, and our offshore, oil and gas team regularly assists some of the largest market participants. Both teams are consistently top ranked in Legal500 and Chambers. More information about the teams and their contact details is found here (insolvency) and here (offshore, oil and gas).

Partner Stine D. Snertingdalen heads Kvale’s banking and finance team, and is also specialized within insolvency and restructuring. She is ranked in Legal500 and Chambers. More information and contact details are found here