On 23 March, Statoil is presenting its Annual Report and Form 20-F for the year ended 2017, and its sustainability report.
In 2017, Statoil delivered record high equity production of 2.080 million barrels of oil equivalent per day and an underlying production growth of more than 6%, driven by continued strong operational performance and new fields starting production.
This has, combined with further efficiency improvements, contributed to USD 3.1 billion in free cash flow for the full year and strengthened Statoil's financial position. The reserve replacement ratio (RRR) was 150% in 2017, due to sanctioning of new projects and positive reserve revisions on existing fields.
'In 2017 we presented our strategy: always safe, high value, low carbon, and we set clear ambitions for the future. We have delivered above and beyond our ambitious targets, and Statoil is now a stronger, more resilient and more competitive company,' writes president and CEO of Statoil ASA, Eldar S?tre in a letter to fellow shareholders.
'We must always be prepared for volatility in our markets. Our improvement work started when prices were still high, and we have used the downturn to reset the company,' S?tre writes.
2017 saw increased prices and increased margins for the industry. Statoil's average realised liquids price was USD 49.1 per barrel for the year, with oil prices increasing towards the end of the year.
Organic capex for 2017 was USD 9.4 billion, a USD 1.6 billion reduction from the initial guiding, achieved through continued efficiency improvements and strong project deliveries. Statoil completed 28 exploration wells in 2017.
For the full year, the serious incident frequency came in at 0.6, a positive development from the previous year.
'We will use this as inspiration and continue our efforts. The ‘I am safety’ initiative, launched across the company is an important part of these efforts,' S?tre says in the letter.
Embracing the energy transition
The Annual Sustainability Report offers an overview of how Statoil follows up its ambitious sustainability agenda and performance. Sustainability is embedded in Statoil’s strategy, and the company is taking actions to develop the business to support the UN sustainability goals and the Paris agreement.
In 2017, Statoil launched a new climate roadmap outlining aims to reduce the carbon intensity of its upstream oil and gas portfolio to 8 kg CO2/boe by 2030, achieve annual CO2 emission reductions of 3 million tonnes by 2030 and build an industrial position in profitable new energy of up to 15-20% of capex by 2030. The company will also invest around 25% of research funds into new energy solutions and energy efficiency by 2020.
'In Statoil we believe the winners in the energy transition will be the producers which can deliver at low cost and with low carbon emissions. We also believe there are attractive business opportunities in the transition to a low-carbon economy,' writes S?tre.
Statoil reduced its CO2 intensity from our production of oil and gas by 10% year-on-year, from 10kg CO2 per boe to 9kg CO2 per boe. In 2017 we achieved CO2 reductions of 356 000 tonnes.
'CO2-emissions from our oil and gas production were reduced with an additional 10% per barrel last year. In the fall 2017 we started production from Dudgeon, and the floating windfarm Hywind. Today, we operate three offshore wind projects in the UK, delivering competitive returns. Statoil will continue its journey from a focused oil and gas to a broad energy company,' he continues.
The report also shows the robustness of Statoil's portfolio, illustrated by a resilience test using different scenarios from the International Energy Agency. The changes in Statoil’s value in the scenarios is mainly driven by different oil and gas price assumptions.
Statoil has continued to improve the value and robustness of its portfolio compared to 2016 – reducing the breakeven oil price to USD 21 per barrel for its next generation projects.
In 2017 Statoil's total payment to governments was USD 9.6 billion. Statoil's total purchases of goods and services was around USD 18 billion.