The record-high cash flow in 2021 also comes at a price - the high price of our products. Gas prices have been exceptionally high, particularly in the last half of 2021. The oil price has also rallied considerably after a period of historic lows, including a brief period of time in 2020 where it was even negative. In the 4th quarter alone, Petoro delivered NOK 88 billion in cash flow from the SDFI portfolio.
"This record-breaking result also comes as we are in the midst of a geopolitical crisis, where Russia's invasion in Ukraine creates fear and uncertainty," Kragseth says. "This is a very serious development, and such an assault creates great suffering for those affected. The result could be one of the largest humanitarian disasters in Europe in several decades."
Russia is also a major exporter of oil and gas, much of which goes to Europe with Ukraine as an important transit country. This conflict could lead to lower economic growth and even higher energy prices. "Norway has an important role to play as a reliable and safe supplier of oil and gas to Europe, both today and for years to come," says Kragseth.
Activity has been high on the Norwegian shelf throughout 2021. One of the reasons for this is the financial incentives the Parliament introduced to secure activity for the supplier industry during the pandemic. Several development decisions were made in 2021 and more will be made this year. Petoro has never had this many projects in its portfolio to mature toward an investment decision. "Operators and partners bear a great responsibility to ensure that all projects that come up for decision have been thoroughly prepared," Kragseth says, and goes on to emphasise that Petoro has a special responsibility with its vast portfolio.
The Martin Linge field, which started up in 2021, was an important milestone for Petoro. The field is electrified and a good example of how we will contribute to reach the objectives to cut emissions from the Norwegian shelf. At the same time, the electricity crisis has led many to call for slowing down the electrification of the shelf. "We believe the electrification must continue, because it's our most important tool to cut emissions. Everyone needs to walk the talk," Kragseth says. Electrification contributes to emission-free production of gas. This gas could be the backbone in the production of other emission-free energy carriers, such as hydrogen and ammonia. "Norway will be producing gas for many decades to come. Gas will be an important contribution in the green transition," Kragseth concludes.
There were a total of 22 serious incidents in the SDFI portfolio in 2021, which results in a serious incident frequency of 0.7. This represents an improvement from 0.9 in 2020. Falling objects continue to dominate the range of incidents in raw numbers. The personal injury frequency was 3.8, which is at about the same level as 2020. Petoro always puts safety first, and this approach is clearly communicated through the company's expectations for HSE management and HSE culture in the licences.
Net cash flow to the state from the SDFI at year-end amounted to NOK 186 billion, 127 billion higher than last year. The increase was mainly caused by significantly higher income as a result of increased oil and gas prices.
Total production reached 1,026 thousand barrels of oil equivalent per day (kboed), an increase of 38 kboed compared with the last year.
Gas production amounted to 101 million standard cubic metres (mill. scm) per day, an increase of three per cent compared with the same period last year. This increase was mainly caused by increased gas extraction on Troll and Oseberg, partially offset by the production stoppage on Snøhvit following the fire on Melkøya. The average realised gas price was NOK 4.78, compared with NOK 1.25 per scm last year.
Liquids production amounted to 388 kboed, 14 kboed higher than last year. The increase was caused by higher production capacity and accelerated production from Johan Sverdrup, as well as production from the Snorre Expansion Project. This increase was partially offset by natural production decline on several mature fields. The average realised oil price was USD 70, compared with USD 40 per barrel in 2020. However, the price increase in USD was somewhat offset by a bullish NOK, meaning that the achieved oil price measured in NOK was 603, compared with NOK 376 per barrel last year.
Please see the annual report for additional details
Head of Communications
Christian Buch Hansen
+ 47 926 24 255