Very satisfied with results

August 2, 2004, 09:35 CEST

Satisfaction with Statoil’s progress has been expressed by acting chief executive Erling Øverland after the group delivered one of its best-ever operating results for the second quarter of 2004.

Income before financial items, other items, income taxes and minority interest for the April-June period amounted to NOK 14.2 billion, an improvement of 38 per cent from the same three months last year.

“This is a strong performance,” says Mr Øverland. “High oil prices and good output, combined with persistently low production costs per barrel, are among the most important reasons.”

He adds that a huge commitment by the workforce and the improvement programme launched in 2002 also had a positive impact on all parts of the business.

“Our operations are good and efficient, and we’re reaching the targets set for the improvement programme. That reflects a collective effort at all levels of the group.”

Action has been taken by Statoil after a contractor employee died as the result of a work accident in Iran’s South Pars project.

Excluding this tragic fatality, however, health, safety and the environment made progress. Personal injuries and serious incidents declined from the equivalent quarter of 2003.

Commenting on highlights in the second quarter, Mr Øverland is particularly gratified with the outcome of the 18th Norwegian offshore licensing round for Statoil.

The group secured four new operatorships as well as interests in another five production licences.

“With these extensive awards, we have laid the basis for increased exploration activity and hopefully for many new discoveries in coming years.”

Statoil presented preliminary plans in June to build a power station at its Mongstad refinery near Bergen and to expand its methanol plant at Tjeldbergodden in mid-Norway.

Also embracing a gas-fired power station at the latter site, these proposals represent the largest commitment to mainland industry in Norway for many years.

The group bought out Swedish retailer ICA from the Statoil Detaljhandel retailing company during the third quarter.

“This buy-back gives us a good basis for strengthening our leading position in the service station market in the Nordic region and around the Baltic,” says Mr Øverland.

Internationally, he notes, Statoil has taken important steps to strengthen its position in the gas sector.

“Our participation in the In Amenas and In Salah gas fields in Algeria has been approved by the national authorities, and we became operator for another Algerian gas block last week.

“I’m also very gratified that we’ve secured a quadrupling of our capacity at the Cove Point liquefied natural gas terminal in Maryland, USA, from 2008, which is in line with our LNG strategy.”

Increased costs for Statoil’s Snøhvit development in the Barents Sea made their mark on the second quarter, Mr Øverland acknowledges.

“We still face challenges relating to cost trends and progress on this project. But I’m confident that we’ll be able to bring it in within the new financial framework.”

When Statoil secured its stock market listing in the summer of 2001, it communicated a number of targets which were to be met by 2004.

“We’re well placed to meet most of these goals,” reports Mr Øverland. “The exception is finding and development costs per barrel.

“That relates to the fact that the Norwegian krone has strengthened against the US dollar. And due to the high oil price, we expect booked reserves from the international production-sharing agreeements to be lower.

“It’ll also be demanding to meet the production target of 1,120,000 barrels of oil equivalent per day in 2004 – but that goal remains unchanged.”

Helge Lund takes over as Statoil chief executive on 16 August, when Mr Øverland returns to his post in the corporate executive committee.

He will also be serving as president of the Confederation of Norwegian Business and Industry (NHO).

His five months as acting chief executive have been interesting, demanding and personally challenging, he observes.

“I’m very grateful for the support I’ve received from the organisation, which has meant a great deal to me.”