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(Adds oil directorate chief, analyst)
By Joachim Dagenborg
STAVANGER, Norway, Jan 15 (Reuters) - Norway's oil industrywill shrink this year and its decline could gather momentumunless crude prices recover, the country's oil directorate saidon Thursday.
By the end of 2019, it estimated oil production would fallby 8 percent as low prices hinder new developments and makeextractions from mature fields less cost-effective.
"Over a five-year period, we believe that investment willfall by 175 billion crowns ($22.7 billion)," Bente Nyland, thehead of the Norwegian Petroleum Directorate (NPD), added.
"This is due in part to lower investments in producingfields than was presumed last year and in part to projectpostponements for new field developments."
Brent crude has lost more than half its value sincemid-2014 and trades at around $50 per barrel, almost 20 percentbelow the figure used by the NPD to make its new forecasts.
Norway's oil production averaged 1.51 million barrels perday (mmboe) in 2014 and would fall to 1.39 mmboe by 2019, theNDP estimated.
If Brent does not rise back above $60, output could fall ata faster rate, Nyland said, though production from existingfields would not be cut as most were profitable even at currentprices.
Norway has become one of the world's most expensive oilproducers and central bank data shows that no new platform-baseddevelopment sanctioned since mid-2012 would break even atcurrent prices.
Close to a dozen new oil projects were expected to beapproved in Norway 2014 and 2015, but just one went ahead lastyear and now only a handful are expected this year, includingfrom Statoil, Premier Oil and BASF unitWintershall, she said.
Statoil and Shell have cancelled ordelayed big projects in Norwegian waters while Lundin Petroleum said it would sharply reduce exploration, focusing onprojects already under way.
If the price does not rise, further delays are possible atprojects including the $5.7 billion upgrade of Statoil's Snorrefield and the development of RWE's Zidane field, ParetoSecurities analyst Trond Omdal said.
Another project that hangs in the balance is Statoil's600-million barrel Arctic Johan Castberg project, postponed dueto high costs, though Nyland said she expected the field wouldbe developed eventually.
Statoil's Johan Sverdrup, the biggest North Sea find indecades with up to 2.9 billion barrels of oil equivalents is notin danger tough as it could break even with oil prices as low as$40-45 per barrel, analysts say.
Norwegian gas production will rise from last year's 109billion cubic metres to 112.9 billion by 2019, the directoratesaid.
(Additional reporting by Balazs Koranyi and Stine Jacobsen,editing by Terje Solsvik and John Stonestreet)
