Statoil Executive Sigve Nylund says industry must address cost level now in order to ensure profitable production on the Norwegian Continental Shelf over the long term.
The Norwegian offshore oil and gas industry needs to work together to control costs now if the Norwegian Continental Shelf is to see profitable production in the future, according to Statoil's head of development and production for the NCS.
In a speech at Statoil's Energy Seminar in Bergen Thursday, Statoil Executive VP for Development and Production Norway Arne Sigve Nylund said:
"The investment level on the NCS reached an all-time high in 2013. Since 2010, Statoil has increased its annual investments by more than 75 percent, and we see that the investment level will remain high in the years to come. But we must address the cost level now to ensure profitable NCS production in the future."
Statoil noted that the return on capital employed during the last decade has been reduced by one-third. While a high oil price has helped to counter this, costs have also risen to record high levels – so making the industry even more vulnerable to a drop in the oil price.
With investing in oil and gas costing more, amid tighter margins and greater risks, Statoil believes the challenge to bring costs down affects the whole industry both inside and outside Norway.
"Statoil wants to be in the forefront and meet the challenges by focusing on cutting costs, efficiency and simplification. As operator, however, we need to have both suppliers and authorities on our team to succeed," said Nylund.
"The authorities must ensure predictable framework conditions to maintain the industry's competitiveness. A stable activity level is also crucial."
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