Statoil to save another $1 billion in further cost-cutting push

Norwegian oil and gas giant Statoil will reduce its costs by another $1 billion during 2017.

The oil company on Friday presented its annual report for 2016 where it said it expects to achieve an additional $1 billion in efficiency improvements in 2017 for a total of $4.2 billion.

While oil prices in 2016 increased over $30 per barrel towards the end of the year, the company said in the report that its average realized liquids price for the year as a whole was still below $40 per barrel.

Statoil President and CEO, Eldar Sætre, wrote in a letter to shareholders: “We delivered our cost improvement program above target. The next step will be to go from project mode to a culture of continuous improvements, and we have set a target of achieving $1 billion in additional cost improvements in 2017.”

According to the report, the $1 billion improvement is on top of already achieved $3.2 billion.

Sætre further wrote: “The break-even price for our ‘Next generation’ portfolio of projects is now at $27 per barrel of oil equivalents.”

During 2016, Statoil’s equity production was helped by high production efficiency and amounted to 1,978 million barrels of oil equivalents per day, which is a slight increase compared to 2015.

The company said that the equity production for 2017 is estimated to be around 4- 5% above the 2016 level.

Statoil’s serious incident frequency, measured as incidents per million hours worked for both Statoil employees and contractors, increased from 0.6 in 2015 to 0.8 in 2016 due to a fatality in South Korea and a helicopter crash at the end of April that killed 13 people.

The company’s organic capital expenditures for 2017 are estimated at around $11 billion.

Offshore Energy Today Staff