Large oil revenues – despite lower prices
The State’s Direct Financial Interest (SDFI) on the Norwegian continental shelf yielded a net cash flow to the government of NOK 33.2 billion in the first quarter of 2009, compared with NOK 39.9 billion for the same period of last year.
This reduction of almost 17 per cent was small when compared with a halving in oil prices measured in US dollars. The main reason is that gas prices remained high. Another positive factor was that production remained virtually unchanged from 2008. Income after financial items for the first quarter was also substantial, at NOK 31.2 billion compared with NOK 41.4 billion for the same period of last year. Oil and gas production was at roughly the same level – 1 295 000 barrels of oil equivalent per day (boe/d) compared with 1 306 000 boe/d in the first quarter of 2008.
“This is a strong performance considering how low oil prices were early in 2009 compared to prices a year ago,” says Kjell Pedersen, managing director of Petoro, the company which manages the SDFI on behalf of the government. “At the same time, we must be aware that when gas prices also fall from the second quarter – and assuming that oil prices remain low – quarterly results are likely to weaken through the year.”
He is otherwise very satisfied with exploration results for the first three months of 2009. Estimates of petroleum volumes proven in this period are twice as high as for all discoveries with SDFI participation in the whole of 2008. “New discoveries are key to extending petroleum operations and securing long term value creation from the NCS,” Pedersen says.