Statoil hopes to hit 2007 target

Oslo |<a href=www.gulf-news.com>Gulf News-Reuters | 29-04-2003

Norwegian Statoil reckons it will reach its oil and gas output goals for 2007 but is worried about fading prospects after that unless it gets access to new exploration areas, its chief executive said yesterday.

Olav Fjell also said that gas activities were playing an increasingly important role, estimating gas would replace oil as its key business within 20 years.

"We are in a phase that we can call the gas age," Fjell said on the sidelines of a first-quarter result presentation. "I think gas will be more important than oil for all of us within a 20-year period."

Statoil, Norway's biggest oil and gas producer and the biggest Nordic firm by turnover, said first-quarter profits were boosted by firm oil production and prices, and stuck to a 2004 output goal of 1.12 million barrels of oil equivalent per day (boed).

It said January to March pre-tax profits rose 17 per cent year-on-year to 12.58 billion Norwegian crowns ($1.77 billion). The company reaffirmed its key performance and production targets for 2004.

But the profit lagged analysts' forecasts of 13.08 billion as a strong Norwegian currency undermined dollar-denominated earnings and gas prices fell.

It targeted production of 1.06 million boed this year. It did not spell out longer-term output targets but Fjell said the group was on track to reach an earlier stated goal of producing 1.26 million boed in 2007.

"Today, we are producing roughly one million barrels (oil equivalent) a day. I think that will last until 2007," Fjell said. "We will reach the goals that we have communicated."

But he said he feared authorities' reluctance to open northern areas of the Norwegian continental shelf for exploration could dampen future production prospects for Statoil and its peers, and damage Norway's future as an energy nation.

Norway, pumping about three million barrels of oil per day, is the world's third-biggest oil exporter after Saudi Arabia and Russia, and a major gas supplier to Europe.

"How long we will manage to keep current output levels will depend on whether we get access to new exploration areas so that we can put new areas in production. If we don't get that, we'll see lower production volumes in the future," Fjell said.

"When I'm worried about exploration on the Norwegian shelf, I'm talking about production volumes further out in time, after 2007," Fjell said.

He expressed high hopes for Norway's 18th offshore licensing round and for authorities' environmental impact study of possible future oil activities in the Arctic Barents Sea, due to be completed in autumn this year.

Statoil's giant Snoehvit liquefied natural gas (LNG) project, due to come onstream in 2006, is so far the only active energy development on the Norwegian side of the Barents Sea.

The project has spurred sharp environmental protest and political resistance for further exploration in the area, which is believed to contain huge gas reserves which oil firms hope can compensate for maturing North Sea fields further south.

Fjell said international operations would gradually make up a bigger share of overall oil and gas output, with the biggest focus on Iran, Venezuela, Brazil and Azerbaijan.

"On a longer-term basis, we hope to be able to do something in Russia," he added. "We have worked mostly with Lukoil, but we are also talking to others. But that's far ahead in time."