He concluded by saying that all the overall financial targets for the company's oil operation had been met. Prospects for 2004 also look positive. Prognoses indicate a continued annual increase in oil and gas production up to 2007.
"We are right at the top of the world class in terms of annual production growth in oil companies," said Torvund.
As operator, Hydro ranks number 14 among the world's largest oil companies, and is number five offshore. Within the field of "smart" well technology and multi-branch drilling, Hydro is a world leader and among the international elite in connection with advanced seabed operations and large, challenging development projects.
A survey of oil companies operating in the Norwegian and British sectors in the North Sea, carried out by the consultancy company McKinsey, gave Hydro top place in terms of cost efficiency. Altogether this competence leads to increased production and recovery rate, more efficient drilling, reduced costs, lower risk and greater opportunities for developing marginal discoveries.
Against this background, he was very satisfied that Hydro last week submitted the plan for development and operation of the large and challenging gas field – Ormen Lange – according to plan.
"We are confident that we can master both the technology and the dimensions that the development involves," said Torvund.
The Ormen Lange development is on schedule. So was the Grane field, which started production earlier this year, ahead of target and at a development cost that was NOK 1.5 billion below budget.
Efficient project implementation
Both Tore Torvund and President and CEO Eivind Reiten took the opportunity to draw attention to Hydro's statistics for efficient project implementation at the Capital Markets Day. They also expressed their satisfaction that the continual efforts to increase the efficiency of work processes since the take-over of Saga Petroleum had made Hydro the most efficient oil and gas producer in the North Sea.
They were less pleased with the strong focus over the last two years' in high-risk projects in the international arena.
"Our proactive efforts did not give the results we had hoped for. The risks were higher than we were willing to accept over time. We have therefore decided to review our international exploration strategy, and have established a new exploration organization with a centralized decision process.
The exploration budget will be reduced to one billion kroner next year, but Torvund said he expected the exploration budget to be around NOK 1.5 billion in future years.
"We will reduce our exposure in high risk projects at the same time as we will step up exploration in areas close to established infrastructure," he pointed out.
"In the international arena we will now direct more focus to purchasing strategic reserves in developments where our competence can best be applied. The decisive factor in the purchase of resources will be profit rather than ambitions of growth. We attach great importance to capital discipline, and the relevance of projects to our core expertise." He underlined that the company still believes that there are good chances of discoveries in the Norwegian continental shelf.
Torvund pointed out that all the development projects Hydro is involved in will give at least ten percent profit at an oil price of USD 16. This has been established as a new decision criteria.
Hydro will triple the recovery of gas from Oseberg up to 2010 without any new investments. The investments have already been made. The company plans to sell 12-13 billion cubic meters of gas in 2004.
"We continue to build up positions from which to develop downstream activities. A link in this connection is the work on setting up a company together with Wingas for marketing gas in the UK," said Torvund.
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