Very satisfied with the third quarter

October 27, 2004, 09:35 CEST

One of the best quarterly results ever achieved by Statoil was presented today by chief executive Helge Lund.

“The strong development in oil prices made a special contribution to this good outcome,” comments Mr Lund.

“Production during the period was affected by many demanding maintenance shutdowns and the continuing labour dispute in the rig business on the Norwegian continental shelf.

“All in all, however, these results confirm together with events in the third quarter that we are well positioned in both strategic and financial terms.”

The group achieved an income before financial items, other items, income taxes and minority interest of NOK 16.1 billion in the third quarter – up by 32 per cent from the same period of 2003.

Among third-quarter highlights cited by Mr Lund are the start-up of Kvitebjørn in the North Sea on schedule and within budget. The Alpha North project on Sleipner West also began production on time, and 26 per cent below the original cost estimate.

“Good planning and execution have been crucial here, particularly for the complex Kvitebjørn reservoir with its high pressure and temperature,” the chief executive notes.

Bringing Kvitebjørn on stream, with its gas production piped to the Kollsnes processing plant near Bergen, marks an important step in creating value from Statoil’s Norwegian gas chain. After processing, the dry gas is piped to continental Europe while the natural gas liquids are sent to the Vestprosess facility at Mongstad for fractionation into propane, butane and naphtha.

“This is a good example of the way upstream, downstream and gas business operations work together to maximise our value creation,” says Mr Lund. “That’s entirely in line with the way we will be thinking and working in a unified manner in the time ahead.”

Statoil’s third-quarter production was affected by maintenance turnarounds and important upgrading work on a number of its installations. The labour dispute between the Norwegian Shipowners Association and the Federation of Oil Workers’ Trade Unions also hit output from several fields. These matters, along with maintenance costs for Sincor, have contributed to raising the unit costs in this quarter.

“I’m pleased that production from our international operations increased by 32 per cent over the past year,” says Mr Lund.

“Building a robust international business is demanding and takes time, but the start-up of In Salah in Algeria and Angola’s Kizomba A during the third quarter shows that results are becoming visible.”

He also highlights the job being done on the gas side, where overall production permits were utilised to virtually their fullest extent during the 2003-04 gas year.

In the Manufacturing & Marketing business areas, manufacturing activities and the Borealis petrochemicals group are benefiting from market conditions.

A number of measures are being taken in the retail business to create an even stronger foundation after Statoil purchased ICA’s 50 per cent interest in Statoil Detaljhandel Skandinavia (SDS).

The group suffered two fatal accidents during the third quarter at a coating yard which is readying line pipe on behalf of the group for the South Pars field off Iran. These incidents occurred despite an active commitment to raising health, safety and environmental standards in this project.

“This is a reminder that we must continue to pursue our commitment to HSE with full vigour,” says Mr Lund. “We’ve collaborated with the contractor to identify the causes, and improvement measures have already been initiated locally.”

Both the total recordable injury and the serious incident frequencies were reduced by comparison with the same quarter of 2003.

“The results we’re presenting are strong, and we are making concerted efforts to achieve our scorecard for 2004,” says Mr Lund. “But we’re not going to rest content with that.”

“The new management and organisation are working in parallel to define new goals and business plans for the future. This is a demanding but stimulating job, which I’m looking forward to presenting to the capital market in December.”