At the same time as the money is pouring in, the oil company is feeling inflationary pressures. CEO Torger Rød believes that prices will rise even more in the future.
There is a lot of activity now, and there will be a lot of activity in Norway in the future. We have to work well together so we don’t compete with each other too much on the resource side, Rød tells E24.
It can be locked at the door in certain areas and certain activities. We should focus on that, he says.
President Vår Energi presented the company’s quarterly report on Tuesday. Money is pouring in, but net profit has been withdrawn by a billion write-offs after the crack in the Balder project.
What we are in now is not normal
Oil companies are planning a high level of activity on the grid control station in the future. This year, a series of development plans are expected to be delivered after the tax package put in place by the European Parliament for the oil industry.
At the same time, rising oil and gas prices are making happy times.
– Are you worried about the demise of costs?
I think it is important to remember that what we are in now is not normal. Anyway, it’s something we are very keen on at Vår Energi. We have good plans, good portfolios and strict criteria for making decisions on projects and wells.
– I think this applies in general to the industry as well. We know we have a cyclical industry, says Rudd.
Research firm S&P Global predicted a steady rise in costs over the next few years from a high, indicating a tight job market for engineers.
Rød says Vår Energi is “working well” with other operators to achieve economies of scale.
It’s not just about winning as many people as possible, but also about the way we work. Collaboration and partnership are essential so that we do not incur unnecessary costs and compete unnecessarily for the same people and resources.
Vår Energi delivers weaker than expected results
Signs of inflationary pressure
In the quarterly report, the oil company notes that the coronavirus, disruptions in the value chain and inflationary pressure “continue to affect Vår Energi and the energy sector”.
According to Rudd, analysis by consultancy Rystad Energy indicates continued price growth in the coming years, but “maybe somewhat calmer than in 2021 and 2022.”
The overall picture is starting to take effect in terms of increased interest rates and increased uncertainty. The price increase is likely to continue in the future.
Vår Energi saw that “service prices have gone up somewhat,” while prices for chemicals, steel and equipment have also gone up, according to Rudd.
There are things that are included in our estimates and budgets.
At the same time, lead times are becoming longer as a result of, among other things, the effects of the aura, according to Rudd.
It also mentions “access to resources”.
– It’s part of this picture. These are things we are working on.
Rød notes that progress on Vår Energi’s projects is “more or less according to plan”. He says it’s an advantage that the projects have come a long way.
– In general, the projects are well under way, so that contracts have been awarded, rigs have been commissioned and activity continues. This means that we are less exposed to the impact of inflation and value chains.
notation of values
In September, Vår Energi announced the crack in the Balder project, in which production and storage vessel Jotun will be upgraded and extended before the vessel operates between the Balder and Ringhorne fields in the North Sea.
The additional cost of NOK 11.5 billion means the project will cost a total of NOK 40.7 billion, according to the company.
As a result, the company had a net impairment of $573 million in the third quarter, according to the quarterly report.
In October, Far Energy cut off Expectations for this year’s productionwhich led to a sharp decline in the stock on the Oslo Stock Exchange.
EU countries enter into an energy agreement without a gas price cap
At the same time, the price of gas in particular rose, but recently fell. Vår Energi’s manager described the quarter as “exceptional”.
– There are high prices and high profits, he says.
Rudd also highlights leaks in the Nord Stream gas pipeline, with experts saying there are many indications of sabotage.
What happened with Nord Stream is an important reminder of how far Norway is when it comes to providing Europe with reliable and safe gas and energy.
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