Statoil’s boss warned yesterday that the downturn is not yet over, but said the Norwegian major had no plans for further job cuts.
Eldar Saetre, president and chief executive of Statoil, also tentatively suggested that more stable oil prices could lead to an increase in consolidation across the sector.
Mr Saetre said: “The downturn is not over. I still think we will see higher prices. There is a lot of volatility and uncertainty in the short term.
“That has to do with Opec compliance to the quotas (for internationally agreed output cuts). It has to do with political uncertainties and how US shale will respond to the higher oil prices.
“So we see there current levels being maintained for some time. This is going to gradually make us into a much more balanced market. We could even move from surplus to deficit this year. We could start to digest the storage levels we have seen globally and then we will see the impact from the fact we have invested at very low levels and introduced very little new capacity.
“That accumulates and has an impact on the oil price. Then additional capacity from US onshore is not enough to cater for that and also cater for the annual decline we see every year.”
Mr Saetre was speaking after Statoil revealed its full-year financial results for 2016.
Operating and administrative expenses were cut by 13% last year thanks to “cost improvement initiatives” and exchange rate shifts.
But Statoil’s revenues dropped 21% to $45.7billion in 2016 as low oil prices continued to weigh on the company.
The business also went from a pre-tax income of $55million in 2015 to a deficit of $178million in 2016.
Statoil expects to spend about $1.5billion on exploration activity this year and has ambitious plans for five to seven wells in the Barents Sea.
The company completed 23 exploration wells in total last year.
Statoil is targeting an additional $1billion in efficiency improvements in 2017, but Mr Saetre said that did not mean more redundancies would follow.
He said: “In terms of additional staffing reductions there is no programme or plans to do that but we will continuously look for opportunities to optimise our organisation.”
When asked about a potential increase in M&A activity in the oil sector, Mr Saetre added: “In terms of industry and consolidation, I’ve been wrong on that so many times I should be cautious about speculating on that.
“I think there will be a dynamic as we move from a very low price environment. People expect a stronger price environment and that could trigger some restructuring and other activities, but I wouldn’t speculate any further.
“But we have seen the volume of transactions increasing lately.”
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