Statoil cuts investments after heavy 2015 losses

Norwegian oil giant Statoil has slashed investments and stepped up a cost-cutting programme after recording a huge annual loss for 2015 in the wake of tumbling oil prices.

Statoil cuts investments after heavy 2015 losses
Photo: Tore Meek / NTB scanpix
The company reported losses of 37.5 billion kroner (€3.96 billion, $4.39 billion) last year compared to profit of 21.9 billion kroner in 2014.
The group — 67 percent-owned by the Norwegian state — said it would slash its investments this year by $3.5 billion to $13 billion. It also plans to expand a cost-savings programme by 50 percent to reach $2.5 billion annually.
For the fourth quarter, net losses rose to 9.2 billion kroner from 8.9 billion a year earlier.
“The result in the fourth quarter is highly impacted by the weak commodity price,” Statoil CEO  Eldar Saetre said in a statement.
“However, we continue to make strong progress on costs and efficiency. We are now further stepping up our improvement programme, and tightening our capital and exploration expenditures. These are key elements in navigating the business during a period of low oil prices”.
Oil companies have been downsizing staff and mothballing drilling rigs in response to a drop in oil prices from more than $100 a barrel in July 2014 to about $30 a barrel currently.
Statoil has placed a lot of hope in the massive Johan Sverdrup oil field in the North Sea, which is expected to begin operations in late 2019 and whose development costs have been reduced by seven percent.
But the group has postponed until the second half of 2018 the start of operations on the Aasta Hansteen field in Norway and the Mariner field in Britain.
They had been expected to open in 2017.
The delays are bad news for the Norwegian economy, which relies heavily on the oil sector.

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NGOs take Norway to European Court over Arctic oil exploration

Two NGOs and six young climate activists have decided to take Norway to the European Court of Human Rights (ECHR) to demand the cancellation of oil permits in the Arctic, Greenpeace announced on Tuesday.

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.