NOK 1.5 billion in first-half profit

July 24, 1998, 01:00 CEST

24.07.1998

The Statoil group has reported a profit after tax of NOK 1.5 billion for the first half of 1998, as against NOK 2.7 billion in the same period of last year. This decline primarily reflects lower oil prices.

Operating profit came to NOK 6.2 billion, down by NOK 3.9 billion in relation to the first half of 1997. Reduced oil prices along accounted for NOK 2.4 billion of the reduction.

Lower oil production, higher exploration costs and weak trading results also had a negative effect on the outcome for the first half-year.

Net financial expenses amounted to NOK 1.3 billion during the first half-year as against NOK 2.5 billion in the same period of last year. The change reflects foreign exchange effects relating to long-term debt.

Exploration and production

This business segment showed an operating profit of NOK 5.8 billion in the first half of 1998, down from 9.4 billion in the same period of last year.

Supplies of equity oil averaged 435 000 barrels per day, compared with 445 000 barrels in January-June 1997. The average posted price for Brent Blend reference crude fell over the period from USD 19.6 (NOK 134) per barrel to USD 13.6 (NOK 103).

Daily sales of equity gas averaged 24.5 million cubic metres during the first half-year, as against 19.2 million cubic metres in the same period of last year.

Following the bankruptcy of a sub-contractor, Statoil Energy in the USA has been required to meet delivery commitments in a market with electricity prices at record levels. The result has been a loss on electricity trading.

In mid-May, Statoil took over production responsibility for the LL652 oil and gas field in Venezuela's Lake Maracaibo together with Chevron (operator), Phillips and Arco.

Plans call for today's output of 9000 barrels per day to be increased more than tenfold over the next four-six years with the aid of modern technology and reservoir management techniques. Statoil has a 30 per cent interest in the licence.

A decision to develop Girassol off Angola was taken in June. Costed at USD 2.5 billion, this project will yield 200000 barrels per day from the end of 2000. Statoil's interest is 13.33 per cent.

Refining and marketing

Operating profit for refining and marketing operations came to NOK 458 million in the first half-year, as against NOK 571 million for the same period of 1997.

Declining oil prices yielded a loss on stocks and weaker results from trading in crude oil and products. Results for retail marketing showed a clear improvement over the first half of 1997.

Operating profit for the shipping business declined somewhat over the period as a result of weaker rates for conventional maritime transport.

The refining business reported a rather lower result, primarily because of a planned turnaround at the Mongstad facility in western Norway.

Statoil has leased refining capacity at the USA's Eagle Point plant in New Jersey. Worth some NOK 3 billion, this deal means that about 65000 barrels of crude per day - primarily from Statoil's Norne field in the Norwegian Sea - will be shipped to Eagle Point for refining.

Petrochemicals

The petrochemicals business segment achieved an operating profit of NOK 327 million in the first half-year, compared with NOK 162 million for the same period of 1997.

Finland's Neste group agreed on 30 April to transfer its 50 per cent interest in the Copenhagen-based Borealis petrochemicals group to Austria's OMV and IPIC, Abu Dhabi's state-owned company for foreign investment.

At the same time, Borealis signed a final agreement to acquire OMV's PCD polyolefin subsidiary. This acquisition increases the group's polyolefin capacity by 35 per cent to 3.3 million tonnes per year and confirms its position as Europe's leading producer of these materials.

The methanol business reported better results than in the first half of 1997, when performance was affected by start-up costs for the plant at Tjeldbergodden in mid-Norway. Results remain weak because of lower methanol prices.