The petroleum sector is a service-intensive industry. The quality, price and availability of services are therefore important for the productivity level in the petroleum sector. This paper analyses data on the Norwegian petroleum sector's purchases of services and estimates the contribution of service input to productivity. It is found that specialisation in the service sector, measured by the number of service suppliers in the market, contributes significantly to the level of productivity of capital equipment. Specialisation in services also contributes directly to productivity in oil and gas, but the results are significant only at a 10 per cent level. We argue that an open market for oil-related services is likely to improve productivity in the Norwegian petroleum sector.

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