The industry is still characterised by considerable uncertainty. The ability of the Norwegian Shelf to compete in a demanding global energy market requires cost-effective production, with the lowest possible emissions. The adjustment work undertaken in 2016 has yielded impressive results. For example, field costs have been reduced by a further 12% since 2015, and we have drilled a record number of wells on our permanent installations.
We rely on continuous new investments in the licences in order to offset the natural decline in existing production. To accomplish this we must create competitive investment opportunities that are attractive to the licensees. However, profitability is challenged by falling recoverable reserves per well in mature fields, and new projects barely meet the requirements for robustness.
"I am certain that the Norwegian Shelf can be competitive in a long-term perspective, and that we can make the necessary investment decisions," says Petoro's President and CEO Grethe Moen.
"The key lies in the industry's ability and determination to implement additional measures. One example I can point to is the necessity of embracing the opportunities offered by digitalisation," says Moen. She emphasises that both digitalisation and new ways of cooperating are necessary in order to provide us with the insight and the decision basis needed to create new values. Given the unique Norwegian culture of cooperation and the high-level expertise in our oil and gas industry, there is nothing that should prevent us from being the global leader in digitalising our sector.
After many years of positive HSE developments, last year was marked by the helicopter accident on Turøy, as well as a number of serious incidents at the end of the year. Petoro underlines the importance of reversing this trend. This is essential in order to maintain confidence in the industry.
We see the effects of our improvement work on our cash flow. In addition to reduced costs, high regularity and the completion of many new wells have offset the natural decline in oil production. Petoro transferred NOK 66 billion to the Treasury in 2016. Since the beginning in 2001, Petoro has generated a cash flow of nearly NOK 1,700 billion to the Norwegian state. Both the cash flow and the result for the year are characterised by substantially lower oil and gas prices in 2016, compared with 2015.
Total production in 2016 was 1.040 million barrels of oil equivalents per day, which is three per cent lower than the previous year. The decline can mainly be attributed to lower gas production. Investments in 2016 were NOK 28 billion, which is on par with the previous year.
Head of Communications Christian Buch Hansen
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