Norwegian oil and gas producer Statoil will continue to make dividend payments a top priority even though oil prices have fallen more steeply than it expected, forcing it to be selective over projects, its acting chief executive said. Statoil expects oil prices to eventually rebound and its plans for the giant Johan Sverdrup field – which could cost up to 220 billion crowns ($28.6 billion) to fully develop – remain unchanged, Eldar Saetre told Reuters on Thursday.
“Our dividend policy remains completely firm,” Saetre said on the sidelines of a conference. “Dividend is highly prioritised and remains firm.” With oil prices falling more than 50 percent over the past six months, energy companies are struggling to come up with the cash to pay for investments and dividends.
State-controlled Statoil has already been selling assets to cover its spending and some analysts said that its quarterly dividend, introduced just a year ago, needs to be reduced or even suspended as the low oil price is draining its cash. “We expected the oil price to fall, but the pace and size of the fall has been bigger than we thought, said Saetre, who is running the firm while the board searches for a replacement for Helge Lund, who left in October to lead Britain’s BG Group.
Statoil will continue to be selective on projects but Sverdrup – Europe’s biggest ever oil development – will go ahead as planned, with Statoil submitting a development plan next month. “We must ensure that projects are as good as possible and that our cost-efficiency programme is paying off,” Saetre said.