Norway’s Statoil holds off on Q3 gas sales

Weak European natural gas prices in the third quarter of 2016 led Norwegian supplier Statoil to defer selling its marketed volumes until future periods, causing a 9% drop in production to a rate of 682 million barrels of oil equivalent (mboe)/day, the company said at its quarterly results.

Extensive maintenance in the third quarter also weighed on Statoil’s gas production.

Hans Jakob Hegge, CFO at Statoil, said that the state-owned company had “moved gas out of the quarter to future periods where we see high prices on the forward curve”.

Prices on the British NBP and Dutch TTF curves are broadly in contango, meaning further dated contracts are more expensive, out to February ‘17 before dropping on products for delivery over the summer, ICIS prices showed.

“In 2015, we produced a high amount of flex gas volumes while we did the opposite this year,” he said.

Statoil’s flexible gas volumes largely originate from the Troll field – the largest offshore gas field in Europe – where production ran at a rate of 65mboe/day in Q3 2016, less than half of production in 2015.

The average price of the NBP and TTF Day-ahead contracts – benchmark prices for European gas – through Q3 2016 was 31.1p/th and €12.82/MWh. This represents at drop of 25% and 35% from the third quarter of 2015.

As a result, Statoil’s natural gas sales dropped by 14% to 10.5 billion cubic metres (bcm) from 2015.

As to which time period gas volumes had been deferred to, Hegge said that there was not a specific timeframe. “The approach is value driven so it will depend on the market. Our traders will use any opportunities that they can take,” he said.

Total adjusted earnings reached $636m in the third quarter of 2016, 69% down from the same period in 2015.

Statoil attributed the decline to continued weak oil and gas prices. thomas.rodgers@icis.com