Strong result and high activity

May 3, 2005, 09:35 CEST

The first quarter of 2005 proved another strong period for Statoil and yielded its best-ever result from operations, reports chief executive Helge Lund.

Price increases of 32 per cent for oil and 21 per cent for gas compared with the same period of 2004 made a substantial contribution to profits progress.

So did favourable margin developments in refining and petrochemicals.

“Our international oil and gas production is continuing to rise, and was up by 65 per cent from the same period of last year,” says Mr Lund.

“That augurs well for delivering in accordance with our 2007 targets.”

The sharp rise in international output derives from Algeria, Angola and the Central Azeri section of the ACG field in the Caspian.

In the longer term, the acquisition of EnCana’s deepwater portfolio in the Gulf of Mexico will give a further boost to the group’s international production. The new position means a considerable expansion of Statoil’s deepwater activities and will make the Gulf of Mexico a new core asset.

In addition comes Statoil’s proactive strategy in the Barents Sea, where the Snøhvit project provides the cornerstone for future efforts. Technology developed for this field forms the basis for continued development in the far north.

“We were recently the first company to submit our proposals to Gazprom for development of the Russian Shtokmanovskoye field, and a decision on participation there is expected during the second half of this year,” says Mr Lund.

The group is also participating in three exploration wells in the Barents Sea, while preparations are under way to apply for acreage in Norway’s 19th offshore licensing round.

Production from the Norwegian continental shelf was affected by the loss of oil output from Snorre A and Vigdis during January. At the same time, overall gas sales were very high during the quarter.

“Efforts to expand NCS production are in an important phase,” says Mr Lund, and notes that plans for development and operation of Volve and Statfjord late life were submitted during the quarter.

“The demanding job of completing Kristin is going well, with the platform in place on the field and being readied for new gas deliveries from the Norwegian Sea. That helps to secure further growth.

“A good commitment by the organisation has also contributed to positive results on the cost side. In a time when prices of products are good, it can be tempting to relax the pressure on improvements. Statoil will not make that mistake. We will maintain our focus on both costs and efficiency.”

The overall long-term trend for safety is positive. But several serious incidents recently emphasise that improvement efforts in this area must be maintained with full vigour.

“We have a good safety standard, but improvements are still needed,” says Mr Lund. “Experience from the incidents on Snorre and the Eirik Raude rig show that work on safety must be given the highest priority by managers and employees every single day.”