Best result in five years, but inefficiency costs too much

[07.03.2019] - Press Release - Petoro 2018 results
Petoro delivered NOK 120 billion to the state in 2018. That is NOK 33 billion more than in 2017 and is one of the best years ever in Petoro’s history. “The Norwegian shelf is better-equipped now than it has been for quite some time. Over the last few years, we have matured robust projects that are competitive, even with significant price fluctuations. This is a competitive advantage we must work hard to preserve,” says Petoro’s president and CEO, Grethe Moen.
However, the effect of these good improvement efforts has levelled off, and we are not seeing the results of further efficiency gains on our bottom line for 2018. Drilling is the most important input factor for maintaining production, and thus revenues. An outstanding improvement was achieved from 2013 to 2016. If this trend had continued, Petoro would have increased revenues from our five most important oil fields by NOK 6 billion over the next two years.
“This illustrates both the window of opportunity and, not least, the importance of continuing to streamline and improve,” says Moen.
Costs up by seven per cent
We also note a seven per cent increase in production costs from 2017 to 2018. This is worrying. We are dependent on the efforts made in recent years having a lasting effect, so that we can reduce costs further through continued improvement in all parts of the value chain.
Competitiveness on the Norwegian shelf
“The players on the Norwegian shelf have exhibited an impressive ability to boost competitiveness in recent years, but our competitors have also done this. The adjustment we are facing now will be at least as difficult as the one behind us,” says Moen. If the industry is to continue this improvement, confidence and cooperation among all players will be a decisive factor. This is particularly relevant for the implementation of new digital technology. One example of this is the collaboration on sharing data following the Konkraft initiative “Competitiveness – changing tide on the Norwegian Continental shelf”.
If we are to succeed in strengthening competitiveness through measures such as sharing data, we are dependent on genuine openness and close follow-up on the part of management in both operators and suppliers. This provides a basis for constructively challenging each other to find the best solutions. This is what cooperation is all about.
An innovative supplier industry is crucial
We are also completely dependent on a sustainable and profitable supplier industry if we want to strengthen competitiveness. “This is crucial for all the players on the Norwegian shelf,” says Moen.
“We must not forget that the suppliers employ most of the personnel in the industry. While 2018 has been a very good year for the oil companies, we see that many supplier companies are still facing challenges. Fortunately, indications are also good in this area, and it is important that the supplier industry perceives the Norwegian shelf as attractive. The suppliers are essential for the innovation and technological development that will ensure the competitiveness of the Norwegian shelf.”
Still need better HSE results
Petoro had a serious incident frequency in the portfolio of 0.7 in 2018, the same as in 2017. This is still too high, even though none of the incidents had major accident potential. To contribute to improvement in this area, Petoro maintains particular focus on performing good risk assessments in a major accident perspective in the various licences, and that we maximise lessons learned from incidents, investigations and authority supervision.
To ensure that the industry will be competitive over the longer term, we must also reduce the CO2 footprint from the entire value chain. Petoro takes part in several projects for electrification of fields on the Norwegian shelf, where one of the most exciting is power from offshore wind to the Snorre and Gullfaks fields.
Financial results
Petoro delivered NOK 120 billion to the state in 2018, this is NOK 33 billion more than in 2017, and is mainly due to substantially higher oil and gas prices, but also lower investments. Total production was 1.085 million barrels of oil equivalents per day, just over 2 per cent lower than in 2017. Liquids production was 7 per cent lower, mainly due to natural production decline and more planned maintenance shutdowns. Gas production was at a record high.

Press contact:
Head of Communications
Christian Buch Hansen
Mobile: 926 24 255

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