Norway turns up oil cash taps

by on July 31, 2012 11:02 am BST

The state’s
direct financial interest held by Petoro generated net income after financial
items of Nkr81.5 billion ($13.5 billion) in the six-month period, up 24% from
Nkr65 billion a year earlier, despite a dip in oil prices to below $90 per
barrel in early summer.

cash flow of Nkr41.6 billion was up 22% on the same quarter a year ago.

attributed the increase to higher sales volumes and prices, with oil prices
averaging $116 per barrel during the first six months.

The holding
company also saw a rise in its oil and gas production in the second quarter to
more than 1 million barrels of oil equivalent per day, versus 845,000 boepd a
year earlier, while gas output was up 30% year on year.

production surge is seen by Petoro chief executive Kjell Pedersen as an indication
that the output decline from Norway’s mature fields is now flattening out and
will be stemmed further as fresh field projects are brought on stream.

further ahead, we see a substantial potential for improving recovery from
mature fields. We will also have several small developments in the short and
medium terms, and large oil discoveries such as Johan Sverdrup, Skrugard and
Maria will be phased in over the next few years,” he said.

wants to see more production wells drilled to realise the resource potential of
mature reservoirs and is calling for field licensees to own rather than lease
rigs to meet their long-term drilling needs and cut costs – a model already
adopted by Statoil for its Category J jack-up newbuilds.

Statoil is
also looking to secure a wellhead platform to further develop its Snorre field
to 2040, according to Petoro.

called on oil companies to make “courageous investment decisions” on such
facilities to prolong the lives of ageing fields based on long-term oil price
expectations, rather than temporary price fluctuations.

He warned
that otherwise “we risk ending up with such low and expensive production that a
quite normal drop in prices could lead to production ceasing long before we’ve
recovered what could have been profitable reserves”.