Grethe Moen - Photo: Emile Ashley
[01.11.2017] - Press release – Third quarter 2017

Considerable revenues for the Norwegian society

“The positive profit development we saw in the first six months has continued into the third quarter,” says Petoro’s President and CEO, Grethe Moen. Net cash flow to the State was NOK 65 billion as of the third quarter, which is an increase of 28 per cent compared with the same period last year. The adjustment and streamlining process the industry has undergone is yielding good results. “Continued efficiency improvements are essential because the oil and gas industry will be the locomotive in Norway’s economy for many decades to come. The income potential is still substantial, but will not be realised by itself.”
 
“Production will continue to demand major investments,” says Moen. “The investment and activity level is a measure of the attractiveness and competitiveness of the Norwegian oil industry.” Petoro estimates that it will invest NOK 27 billion on the Norwegian shelf in 2017, while overall planned investments will total NOK 128 billion. “The result of oil and gas investments has put more than NOK 8000 billion in Norway’s asset column. Forty per cent of this comes from the State’s direct ownership, which is managed by Petoro.”
 
In the near future, Petoro plans to make two significant investment decisions through participation in the Castberg and Snorre licences, while also continuing the Troll Phase 3 project. Although the summer’s exploration campaign in the Barents Sea did not produce the results we hoped for, it looks as if the Kayak discovery near Castberg alone contains more than enough values to finance this year’s entire exploration campaign in the Barents Sea.
 
Half of the annual investments from Petoro will go towards drilling wells in mature fields. The income potential is still significant here. Statoil recently published figures that show a so-called breakeven price of less than USD 20 per barrel from these wells. The lifetime of a well is currently about five to eight years. The repayment time is often less than a year. Projects like Sverdrup, Castberg and Snorre are also attractive investments with the current price situation. These investments will contribute both jobs and revenues to Norway’s economy.
 
This year marks 40 years since the beginning of Norwegian gas export, and two of Petoro’s most important gas fields, Snøhvit and Ormen Lange, have produced for 10 years. “Gas makes up an increasing share of Petoro’s portfolio. The gas share today is almost 60 per cent, and will only continue to grow,” says Moen. “Both the Ormen Lange and Snøhvit fields still require investments to ensure stable gas deliveries to Europe.” And profits are still good. In 2016, the Ormen Lange field contributed NOK 1 million per hour to the Petroleum Fund, through Petoro’s ownership interest alone.
 
“Norway has been a strong oil and gas nation for 50 years. We will continue this position in the future. For this to become a reality, the industry’s challenge will be to create cost-efficient, low-emission production and good HSE results. The petroleum industry generates substantial returns for both the Norwegian state and the oil companies,” says Moen.
 
SDFI result – third quarter of 2017
Net cash flow from the State’s Direct Financial Interest (SDFI) in the oil and gas activities was NOK 65 billion as of the third quarter, an increase of 28 per cent from the same period last year.
Total oil and gas production was 1.1 million barrels of oil equivalents per day, nine per cent higher than in the same period last year. The average oil price was NOK 431 per barrel, compared with NOK 345 during the same period in 2016. Gas revenues were NOK 51 billion, about NOK 7 billion higher than last year as a result of higher gas prices and volumes.
 
Costs associated with operating the fields, field costs, were NOK 330 million lower as of the third quarter compared with the same period in 2016. Investments amounted to NOK 20 billion; 7 per cent lower than last year.
 
The serious incident frequency dropped in the third quarter, but the number is still too high. Continued focus and work is therefore necessary from all players to ensure the positive development continues.


Press contact:
Head of Communications 
Christian Buch Hansen
+47 926 24 255
Publishing date: 01-11-2017