Tore Torvund: "Oil production is increasing."

December 9, 2002, 00:00 CET

This year Hydro's oil and gas production will increase by 12 percent. Next year an increase of eight percent - up to 510,000 barrels a day is forecast. From then on oil production will increase by eight percent a year at least until the end of 2006. The most important ambition aside of finding and recovering more oil and gas is cost discipline.

The increases in production delineated at Hydro's capital markets day in Oslo on Monday were not empty bubbles of gas. They are supported by the plans for new fields that will come onstream during the next four years.

One of these is the Hydro-operated field Grane, which is expected to contribute 77,000 barrels a day when it comes into production in October next year. Indications so far suggest that the price will be one billion krone below budget.

Focus on international oil production

While the Hydro-operated development of Ormen Lange will supply Europe with large volumes of gas towards the end of this decade, it is oil that Hydro is primarily looking for in the international arena. Exploration in block 34 in Angola, for which expectations were high, was the year's major disappointment. However, as Torvund underlines, there have been several findings in 2002, which are under closer evaluation.

"In the international arena we believe that Hebron and Annapolis in Canada, further development in Angola, Anaran in Iran and Murzuk in Libya are interesting projects," said Tore Torvund. In this connection he underlined the value of the collaboration with partners Petro-Canada, Sonangol in Angola, NIOC in Iran and TotalFinaElf in Libya. He pointed out that the results of the current international exploration program will be thoroughly assessed before the company considers taking further steps.

Hydro finds more oil and gas than the company produces. Both in 2003 and 2004, the replacement ratio will be positive - with access to new resources exceeding production.

Competitive edge in the gas market

Hilde Myrberg, the head of Hydro Energy, pointed out that the liberalization of the energy markets forms the basis for Hydro's ambitions in Europe.

"Norwegian gas has a competitive advantage in terms of cost compared with both gas from Russia and LNG from the Middle East. We will have several landing points for this gas in Europe, which means that we will be able to send uncommitted gas wherever the market is most advantageous. Hydro expects to have considerable uncommitted gas volumes when Ormen Lange comes onstream in 2007."

She also pointed out that the value chains for gas and electricity are becoming more integrated, and that these markets are converging.