Weak result in difficult market
Operating profit for the Statoil group in the first nine months came to NOK 7.2 billion, as against NOK 13.2 billion for the same period of 1997.
Lower oil prices accounted for NOK 4.2 billion of this decline, according to the interim report. Net profit for the group came to NOK 1.3 billion, as against NOK 3.1 billion in the first nine months of last year.
"Results after the third quarter are poor, and will be greatly weakened for the year as a whole," says chief executive Harald Norvik.
"Low oil prices are the single most important reason, and we can't reckon with significant increases in future. So our most important task will be to continue working on factors we can influence ourselves.
"We've adopted extensive measures to respond to a development characterised by lower prices and profit margins for our products. Investment will be cut and new projects must be profitable at a lower oil price.
"At the same time, we're continuing and strengthening a number of measures to reduce operating costs, and reorganising our administrative work processes to make more effective use of personnel. These efforts will help to make us more robust."
Results were also affected by a slight decline in oil production by Statoil during the first nine months compared with the same period of 1997. Other factors exerting an influence were high exploration costs, writing down the Lufeng and Varg fields by NOK 300 million and NOK 500 million respectively, and the cost of cancelling the West Navion II drill ship.
Net financial expenses totalled NOK 1.3 billion, down from NOK 2.1 billion the year before. Group revenue for the first nine months came to NOK 93.1 billion, compared with NOK 89.2 billion in 1997.
Operating profit for the upstream business came to NOK 6,554 million as against NOK 11,968 million for the first nine months of 1997. NOK 1,954 million in exploration costs were charged against income, compared with NOK 1,366 million in the same period of last year.
Daily supplies of entitlement oil for the group during the first nine months averaged 429,000 barrels, as against 437,000 barrels for the same period of last year.
The average posted price of Brent Blend reference crude fell over the period from USD 19.20 (NOK 136) per barrel to USD 13.30 (NOK 100).
Daily sales of entitlement gas over the first nine month totalled 23.5 million cubic metres, as against 20.5 million in the same period of 1997.
Operating profit for the refining and marketing business during the first nine months came to NOK 400 million, as against NOK 1,194 million in the same period of 1997.
Declining prices have reduced trading results for crude oil and products. The refining sector showed rather lower profits for the first nine months compared with last year, mainly because of a planned turnaround at the Mongstad facility in western Norway.
Retailing operations, which embrace Statoil's service stations, strengthened their results compared with the same period of 1997.
Operating profit improved substantially for petrochemicals compared with the same period of 1997, rising from NOK 269 million to NOK 435 million.
Results for the Borealis petrochemicals group, owned 50 per cent by Statoil, were on a par with the year before.
The methanol business did better than in 1997, but very low methanol prices mean operating profit so far this year is unsatisfactory.