The positive development on the Norwegian shelf continues. In the first half of 2018, Petoro delivered as much as NOK 56 billion to the Norwegian state; an increase of 14 per cent compared with the same period last year. “If we want to maintain high revenues, we need to see an even stronger drive for innovation in the industry,” says Petoro’s President and CEO Grethe Moen, and adds that we must constantly pursue and facilitate increased technological development.
Mature fields still form the backbone of the Norwegian petroleum industry, and this is where the greatest values are concentrated. Rystad Energy recently conducted a valuation of the SDFI portfolio (State’s Direct Financial Interest), which revealed that it's value has grown from NOK 810 billion to 1093 billion over the last two years. “The mature fields account for about 85 per cent of the value in our portfolio,” says Moen. Further development of the Snorre field was approved earlier this year by the Ministry of Petroleum and Energy, and the plan for further development of Troll was submitted to the authorities. On their own, the values from Snorre, and particularly from Troll, account for about 50 per cent of the SDFI portfolio value.
The jewel in the SDFI portfolio
Petoro manages a 56 % ownership interest in the Troll license. Further development of Troll will yield vast gas volumes at a very low cost. The Troll field is the most important gas field in Norway, and further development of the field will strengthen our gas deliveries to Europe. Parts of the Troll field are electrified and, based on the significant remaining reserves, this gives long-term, competitive and climate-efficient gas production.
“The further development project on Troll will create a cash flow of about 500 billion Norwegian kroner, from Petoro’s share alone. Through this project, Troll will continue to be the jewel in Petoro’s portfolio, and this shows that opportunities opens up when one has the ability to use new technology and new tools,” Moen emphasises.
Technology development is key
We view digitalisation as the key to continued efficiency improvements. On the other hand, we observe substantial variation in the quality of and access to data, as well as variation in ability to use new tools in the licenses. It is important to recognise that digitalisation is not just about technology, but actually requires a completely new way of working; a fundamental change process that relies on far-sighted and decisive leaders.
“Technology development plays a crucial role in the further development of existing fields as the shelf matures. Petoro contributes to this work, particularly with advanced reservoir simulations using new tools. Our primary focus is to create the greatest possible value and achieve the highest possible revenues for the State from our ownership interests,” says Moen.
The changes on the Norwegian shelf the last two years have intensified in the last quarter. Several of the major international oil companies are undergoing change and are reducing their presence on the Norwegian shelf. This opens the door for new companies and new business models that can contribute to create further efficiency improvements, and increase the competitiveness of the Norwegian continental shelf.
SDFI result – first half of 2018
The number of serious incidents in the second quarter is at the same level as in the first quarter. Continued focused efforts on the part of all players are necessary to ensure further improvement.
As of the first six months, the net cash flow from the State’s Direct Financial Interest (SDFI) in the oil and gas activities was NOK 56 billion, an increase of 14 per cent compared to the same period last year. The increased cash flow is mainly due to higher oil and gas prices. Total oil and gas production was 1.073 million barrels of oil equivalent per day, 4 per cent lower than in the same period last year.