Statoil Revises Production Targets

A new Statoil production target for 2007 was unveiled by chief executive Olav Fjell on May 29th during the Capital Market Day presentation. At 1.26 million barrels of oil equivalent per day, the 2007 target represents an extension of the existing 2004 goal and assumes that output will continue to grow by four percent annually.

Statoil's ambition is to double production from its international operations during the period, while maintaining output from the Norwegian continental shelf at one million barrels per day. "The NCS still offers great opportunities for a long time to come," Mr. Fjell emphasized. He added that Statoil aims to keep NCS output at a million barrels per day beyond 2007, but that this would be conditional on access to promising new exploration acreage. "We've been through an extraordinary year since our stock market listing, but the group is sticking to the 2004 targets it communicated during the initial public offering," Mr. Fjell said.

Statoil has improved its competitiveness through cost reductions totaling NOK 4 billion since 1998. It has also become 50 percent bigger by acquiring part of the state's direct financial interest (SDFI) in Norwegian petroleum operations.

Mr. Fjell also noted that earnings must rise by NOK 3.5 billion to meet the commitment to a 12 percent return on capital employed. As a main player in the European gas market, Statoil will be involved in a liberalization process with more gas sold spot. Mr. Fjell also wanted to see a substantial increase in sales to the UK. By 2012, he hoped that the group would derive 40 percent of its oil and gas production from international operations – compared to a target of 10 percent in 2004. This depended on Statoil changing from a regional oil company under strong government influence to a world-class international oil and gas operator in selected areas.