UPDATE 2-Norway sees gas output jump in 2008, less oil

(Recasts, adds carbon capture plans and new exploration)

By Wojciech Moskwa

OSLO, Oct 5 (Reuters) - Norway's gradual shift from oil to gas production will push up natural gas sales by 23 percent next year while oil output drops to levels last seen in the early 1990s, the government's 2008 budget draft showed on Friday.

Oil production, including natural gas liquids, was seen falling to 2.5 million barrels per day in 2008 and 2009 from 2.6 million bpd projected for 2007, according to the budget plan.

Petroleum and Energy Minister Aaslaug Haga called on industry to intensify efforts to arrest the decline in oil output, set to be the lowest since 1994 this year due to dwindling production from many ageing North Sea fields.

"As a considerable oil-producing country with a responsible resource management we have to intensify the effort, especially on existing fields and exploration activities, to slow down this negative trend," Haga said in a statement.

"It will require a considerable effort from the industry as well as from the authorities."

Non-OPEC Norway is the world's fifth largest oil exporter and western Europe's biggest exporter of gas.

A lack of major oil finds on the Norwegian shelf in past years has meant that Norway's two biggest developments, both on stream from last month, were the Ormen Lange gas field and the Snoehvit liquefied natural gas project in the Barents Sea.