Investment in the State’s Direct Financial Interest (SDFI) on the Norwegian continental shelf (NCS) in the first nine months of 2013 increased by no less than 29 per cent from the same period of last year. This contributed to a decline in cash flow from NOK 115.1 billion – nearly a record – for January-September 2012 to NOK 97.8 billion. Lower production and prices also contributed to the reduction.
[Photo: Grethe K. Moen - Photographer: Emile Ashley]
Production averaged 1 022 000 barrels of oil equivalent per day (boe/d) in the first nine months, down 6.5 per cent from the same period of last year. Average prices in Norwegian kroner fell by four per cent for oil and three per cent for gas. Investment during January-September came to NOK 25.4 billion.
Net cash flow in the third quarter was NOK 30 billion, down two per cent from the same period of 2012. Total oil and gas production averaged 952 000 boe/d, compared with 958 000 boe/d for the third quarter of last year. Both gas and liquids output in the third quarter were on a par with the same period of 2012.
Grethe K Moen, President and CEO of Petoro, says that the increase in capital spending reflects the very high level of activity on the NCS.
“The growth in investment is basically positive, as our goal is to maximise the value of the government’s oil and gas portfolio. At the same time, I’m concerned about the sharp rise in costs caused by this activity.
“Our forecasts show an even steeper investment curve for the next two-three years, which reflects the position on the NCS as a whole. Such a development could lead to a further increase in competition over capital and expertise. Together with growing fears of reduced oil prices, this could result in a stricter assessment of investment projects. That could hit capital spending on improved recovery from existing fields more than on the development of new fields. Oil companies, suppliers and the government have a common interest in achieving better control of costs on the NCS.”
On the other hand, Moen was very pleased that the Snorre partnership will go ahead with plans to install a new platform on the field. This was a main element in Statoil's recommendation for a further development of the field up to 2040.
“We support this recommendation, which corresponds fully with our desire to drill more production wells per year,” she comments. “We proposed a new wellhead platform in 2010 precisely to be able to drill a sufficient number of wells within the field’s producing life in order to safeguard reserves and realise the potential for improved recovery.”
Read the board’s interim report at www.petoro.no
Sveinung Sletten, head of communications, Petoro AS
+47 51 50 20 24/+47 95 07 55 54