- State's cash flow lags last year's even as output jumps 10%
- Petoro still sees higher income than government forecast
The state’s oil income is on track to dip to the lowest in at least six years.
Net income from the Norway’s direct stakes in offshore oil and gas fields for the first nine months is 13 percent behind the same period last year and barring a substantial rally in the last three months could dip below the 97 billion kroner received in 2009, data from state oil company Petoro showed on Tuesday. The drop comes even as production has increased 10 percent in the first three quarters, showing the impact of lower prices.
The income “will be significantly lower than last year,” Grethe Moen, Petoro’s chief executive officer, said in a phone interview. She declined to give a more precise forecast.
Western Europe’s biggest oil producer is struggling to withstand a plunge in oil prices that’s led companies such as Statoil ASA to cut investments and jobs. The government plans to next year also dip into its massive $860 billion wealth fund for the first time to cover budget needs.
The state also gets oil revenue via taxes on production from other companies that operate off Norway and from dividends from Statoil. The state-controlled company last week reported a net loss and said it was deepening spending cuts to keep up dividend payments.
For now it looks like the government has taken heed of the anticipated drop in oil income. In the 2016 budget, it predicts it will get a total of 218 billion kroner in oil cash this year, of which 55 percent will come from taxes and fees, 38 percent from direct offshore income and the rest in dividend from Statoil. For next year, it expects 98 billion kroner in taxes and fees and 91 billion kroner in direct income, as well as a 15 billion kroner payment from Statoil.
Petoro predicts this year’s net cash flow to the state to exceed the government’s own forecast of 84 billion kroner, thanks to higher production, Moen said. “I would really hope so, absolutely,” she said.
Oil production has benefited from higher regularity and gas output from deferred volumes obtaining better prices this year, Moen said. Petoro’s gas production in the third quarter was 45 percent higher than a year earlier.
While Petoro hasn’t seen any “unhealthy cuts” in maintenance work, the importance of less downtime has grown because of lower prices, Moen said.
“Revision halts are being delayed and the revision cycle is being changed,” she said. “Incentives for that have grown. If you do that, you’ll increase production.”