Despite 2020 turning out to be an unprecedented year characterised by a substantial drop in demand, the year overall came in better than expected for the Norwegian oil and gas industry. Production cuts helped stabilise the global market, while the Government's stimulus packages ensured that activity could be maintained, and value creation continued. While investments declined in the rest of the world, they increased on the Norwegian shelf by 2% to NOK 150 billion compared with 2019.
 
High activity level
The SDFI portfolio currently has a large number of projects and a high level of activity, both in projects that will contribute toward reducing greenhouse gas emissions, new developments and further developments.
 
Snorre Redevelopment is a good example of improved oil recovery from one of the important, mature fields in the SDFI portfolio. "The redevelopment has increased the reserve base by the size of an entire Goliat field. Petoro has been a driving force for realising this project for a number of years, so it was a significant milestone for us when the field could start production on 12 December last year."
 
The giant Johan Sverdrup field had its first full year of production in 2020. This is the third-largest oil field on the Norwegian shelf and started production in October 2019. Production from the field has been good and stable from day one and production capacity was increased for the third time in January 2021 to 535,000 barrels per day. This is more than 100,000 barrels higher than what was estimated at start-up. "For Petoro, the Sverdrup field now accounts for 20% of total liquids production from our portfolio. At the same time, phase 1 of the field was recently repaid, just 16 months after start-up. Combined with very low CO₂ emissions from production, this all makes the field a good example of a future-oriented and sustainable development on the Norwegian shelf," says Morisbak Lund. In 2020, emissions per barrel of produced Johan Sverdrup oil were below 0.2 kg CO₂, which is up to 100 times less than the global average.
 
In order for the petroleum industry to be competitive in the long term, the CO₂ footprint from every part of the value chain will have to be reduced. Petoro is a partner in several projects to electrify fields on the Norwegian shelf and this work involves a broad range of climate-efficient solutions. "In an effort to secure long-term competitiveness, we believe it's important to invest in zero-emission solutions in the production segment. We have a clear expectation that costs associated with CO₂ emissions will increase, a policy instrument that has historically proven to be highly effective. Our portfolio includes several fields with a long production profile, some as far as 2070, which emphasises the long-term perspective in our work. The goal is to secure value creation and improve the recovery rate while simultaneously ensuring that the Norwegian shelf is a world-leader in low CO₂ emissions," says Morisbak Lund.
 
Petoro was a partner in 12 spudded exploration wells in 2020, nine of which were wildcat wells which resulted in two minor discoveries, the Lomre oil discovery near the Vigdis field, and the Swisher oil and gas discovery near the Fram field. Both discoveries are presumed to be commercial, as they can be tied into existing infrastructure. "A medium-sized discovery in Røver North near the Troll field was also recently announced. This shows that, even after 50 years of exploration drilling, there are still undiscovered resources on the Norwegian shelf. Access to attractive exploration acreage is important in maintaining the attractiveness of the Norwegian shelf," says Morisbak Lund.

HSE results must improve
Petoro had a serious incident frequency of 0.9 in its portfolio, about at the same level as 2019, and falling objects still dominate the statistics. These results are not good enough, and the very serious fire on Melkøya in September was a stark reminder of the risk associated with our activities.
The unprecedented year 2020 also meant that planned maintenance activities were not carried out. Moving forward, we will devote extra attention to ensuring that the backlog built up through the year is taken care of.
 
Financial results
Petoro delivered NOK 59 billion to the state in 2020. This is NOK 37 billion less than the previous year. The reduction was mainly caused by lower prices due to a substantial drop in demand as a result of the Covid-19 pandemic.

Total production reached 988 thousand barrels of oil equivalent per day (kboed), an increase of 24 kboed compared with the previous year.

Liquids production was 374 kboed, 24 kboed (7%) higher than the previous year. The increase was caused by Johan Sverdrup starting up in late 2019. Excluding production from Johan Sverdrup, production declined by 51 kboed (14%), mainly as a result of natural production decline on multiple fields, as well as reduced production on the fields included in the Government's revised production permits. The average realised oil price was USD 40, compared with USD 65 per barrel the previous year. The price drop in USD was offset by a weaker NOK, meaning that the achieved oil price measured in NOK was 376, compared with NOK 572 per barrel last year.

Gas production amounted to 98 million standard cubic metres (mill. Sm³) per day, which is on par with the previous year. Gas extraction was higher on Troll than in 2019, due to price optimisation, but this was offset by lower production from particularly Snøhvit as a result of the fire in late September, as well as from Åsgard. The average realised gas price was NOK 1.25, compared with NOK 1.92 per Sm³ the previous year.

The investments in the SDFI portfolio increased by about 1 billion compared with 2019, which was primarily caused by increased drilling activity on multiple fields. Development investments were somewhat reduced as a result of the completion of Johan Sverdrup phase 1, which is now in operation.


Press contact:
Head of Communications
Christian Buch Hansen
+ 47 926 24 255
ChristianBuch.Hansen@petoro.no