1 000 billion to Norwegian government since Petoro was founded in 2001 - 2011-02-23

More than NOK 1 000 billion to Norwegian government since Petoro was founded in 2001

[23.02.11]

Net cash flow to the government from the State’s Direct Financial Interest (SDFI) on the Norwegian continental shelf since Petoro’s creation in 2001 has topped NOK 1 000 billion. Cash flow in 2010 was NOK 104 billion, up almost NOK 7 billion from the year before.

Net income increased in 2010 by five per cent, primarily as a result of higher oil prices. Overall daily production averaged 1 080 000 barrels of oil equivalent (boe), a slight increase from 1 074 000 boe in 2009.

Revenue from dry gas sales totalled NOK 68 million, compared with NOK 70.3 billion the year before. The total volume of gas sold – including third-party gas – rose by 15 per cent from 2009 to 39.5 billion standard cubic metres (scm), corresponding to 681 000 boe per day.

The Troll field alone accounted for 40 per cent of total gas revenues. Gas prices averaged NOK 1.76 per scm in 2009, down 10 per cent from the year before.

Overall revenue from sales of oil and natural gas liquids (NGL) came to NOK 81 billion, compared with NOK 73.7 billion the year before. The volume sold totalled 175 million barrels, or an average of 479 000 barrels per day.

The decline in oil and NGL production was rather higher then expected, reflecting lower output from the mature fields on the NCS.

Viewed overall, 2010 showed a small decline in investment, says Petoro chief executive Kjell Pedersen. He attributed that to the after-effects of the financial crisis and the postponement of planned activities.

But he adds that a number of projects got back onto a better track in the course of the year. “I’m particularly pleased, of course, that we got Valemon back on track. At the same time, we see that costs which flattened out during the financial crisis are starting to rise again.”

Mr Pedersen still believes that too little is being done to optimise profitable recovery from the major mature fields on the NCS. The negative trend for Norwegian oil production is continuing – and was again greater than expected in 2010.

“This is an ever stronger argument for finding specific methods to reverse the decline before it’s too late. We must move from hope and ambitions to establishing solutions rooted in a realistic decision base.

“These will call for greater investment and adaptation, which we must get initiate as quickly as possible. To maintain production and substantial revenues for the government in the longer term, the SDFI portfolio will also need to secure additional resources from new exploration acreage.”