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Recovering oil prices fuel Statoil profits

Norwegian oil giant Statoil said Wednesday that rising oil prices and record output enabled it to return to the black last year, even exceeding its own targets.

Published: 8 February 2018 09:31 CET

Recovering oil prices fuel Statoil profits

File photo showing Statoil headquarters in Oslo. Photo: Håkon Mosvold Larsen / NTB scanpix

The oil behemoth said in a statement that “higher prices and continued solid operational performance, with record high production” helped it swing back to net profit of $4.6 billion (3.7 billion euros) in 2017 from a loss of $2.9 billion a year earlier.

Full-year revenues grew by 33 percent to $61.2 billion.

“We have delivered above and beyond even quite ambitious targets,” said president and CEO Eldar Sætre.

“In a recovering market, we delivered strong earnings and cash flow from all business segments. We had record high production both in the fourth quarter and for the full year, supported by continued solid operational performance. We expect long-term underlying earnings growth.”

Statoil said it produced an average of 2.08 million barrels of oil equivalent per day in 2017, an increase of five percent over the previous year.

After falling from $115 per barrel in 2014 to under $35 at the end of February 2016, oil prices have been on the rise recently after OPEC countries and other oil-producing nations agreed to throttle output to reduce a glut in the market.

By the end of 2017, oil prices were back at around $60 per barrel.

Statoil's return to profit comes after other oil majors — such as ExxonMobil, ConocoPhillips and Chevron, Royal Dutch Shell and BP — also all reported significantly improved profits last year.

The Norwegian group also plans to ramp up investments to some $11 billion this year, after having scaled them back to $9.4 billion in 2017.

READ ALSO: Statoil invests up to $2.9 billion in Petrobras oil field

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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