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Statoil further cuts investments amid drop in oil price

The Norwegian oil giant Statoil announced on Thursday a deeper cut to its investments this year after a third-quarter loss because of low oil prices.

Published: 27 October 2016 12:30 CEST

Statoil further cuts investments amid drop in oil price

Statoil exec Arne Sigve Nylund arriving at the company's Stavanger headquarters on Thursday. Photo: Carina Johansen / NTB Scanpix

While the quarterly net loss reached $432 million against $348 million a year ago, Statoil slashed $1 billion in its investment expenditure forecasts, now amounting to about $11 billion.

The adjusted earnings dropped to $636 million, well below the $2 billion generated in the third quarter of 2015 and $957 million expected by analysts.

“The financial results were affected by low oil and gas prices, extensive planned maintenance and expensed exploration wells from previous periods,” said chief executive Eldar Saetre in a statement.

Statoil has implemented an aggressive savings programme, laying off staff and renegotiating supplier contracts.

“Strict prioritisation and continued good results from our improvement programme allow us to further lower our 2016 capex and exploration guidance,” Saetre said.

Statoil, 67 percent owned by the state, maintained its forecast production with organic growth expected at 1 percent per year from 2014 to 2017.

In the third quarter, production stood at 1.805 million oil-equivalent barrels per day (Mboe/d) against 1.909 million boe/day a year earlier, a decline due to maintenance work and deferral of gas sales.

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NGOs take Norway to European Court over Arctic oil exploration

Northern Norway. Photo by Vidar Nordli-Mathisen on Unsplash.

It’s the latest turn in a legal tussle between environmental organisations Greenpeace and Young Friends of the Earth Norway on one side and the Norwegian state on the other.

The organisations are demanding the government cancel 10 oil exploration licenses in the Barents Sea awarded in 2016, arguing it was unconstitutional.

Referring to the Paris Agreement, which seeks to limit global warming to less than two degrees Celsius above pre-industrial levels, the organisations claim that the oil licenses violated article 112 of Norway’s constitution, guaranteeing everyone the right to a healthy environment.”

The six activists, alongside Greenpeace Nordic and Young Friends of the Earth Norway, hope that the European Court of Human Rights will hear their case and find that Norway’s oil expansion is in breach of human rights,” Greenpeace said in a statement.

In December, Norway’s Supreme Court rejected the claim brought by the organisations, their third successive legal defeat.

READ MORE: Norway sees oil in its future despite IEA’s warnings

While most of the judges on the court agreed that article 112 could be invoked if the state failed to meet its climate and environmental obligations– they did not think it was applicable in this case.

The court also held that the granting of oil permits was not contrary to the European Convention on Human Rights, in part because they did not represent “a real and immediate risk” to life and physical integrity.

“The young activists and the environmental organisations argue that this judgment was flawed, as it discounted the significance of their environmental constitutional rights and did not take into account an accurate assessment of the consequences of climate change for the coming generations,” Greenpeace said.

On Friday, the Norwegian government unveiled a white paper on the country’s energy future, which still includes oil exploration despite a warning from the International Energy Agency (IEA).

The IEA recently warned that all future fossil fuel projects must be scrapped if the world is to reach net-zero carbon emissions by 2050.

The Norwegian case is an example of a global trend in which climate activists are increasingly turning to courts to pursue their agenda.

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