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Cutbacks in the oil and gas industries are seeping into other areas of the Norwegian economy, as companies slash costs for travel, representation and a host of other activities. Airlines serving Norway, local hotels and restaurants are among those feeling the pinch that already has affected oil service firms.

“Given what’s happening in the oil market, we’re cutting costs where we can, ” Dag Nordbø, communications director for National Oilwell Varco (NOV) told newspaper Dagens Næringsliv (DN) this week. The drilling company has more than 5, 000 employees in Norway, more than 3, 000 of them based in Kristiansand.

Less travel, cheaper tickets
Nordbø confirmed that first the company dropped its Christmas and summer parties for employees and now it’s cutting travel expenses “considerably.” NOV is far from alone, as other companies in the once-high-flying oil and gas business evaluate who really needs to travel and whether expensive flexible airline tickets and hotels can be replaced with videoconferencing.

Such cutbacks, also being made by oil and gas companies worldwide with employees who often traveled to Norway, are hurting Norwegian hotels, where vacancy rates have shot up in recent months. Per-Arne Villadsen, chief executive of large Norwegian travel agency Berg-Hansen, told DN that its sales to petroleum-related customers are down 15 percent so far this year.

“But it’s more dramatic than that indicates, because we’re also seeing a clear tendency that far more customers are choosing the cheapest airline tickets, ” Villadsen told DN. “For the airlines, I’d estimate they’re seeing a 30 percent decline in revenues.” Villadsen also reported travel cutbacks in other non-oil businesses, as the economy in general slows down. “The only clarification we can see is a combination of the cost-cutting programs in the petroleum sector combined with increased uncertainty regarding development of the Norwegian economy.”


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