Oil giant Shell has completed scandal project Corrib, which Statoil is partner in a own nobility of 36.5 percent. Production of gas off the coast of Ireland may soon start 19 years after the gas was discovered, type Irish Independent.
According to the Irish newspaper is Statoil’s total impairments in Ireland only in 2014 at 243 million euros, or 2.2 billion Norwegian kroner. In total, the group’s loss in Ireland have reached 7.7 billion Norwegian kroner.
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– The financial statements applies the local Statoil company in Ireland and we do not comment on details of the reported figures, says Knut Rostad, media relations for Statoil’s international operations.
But he finds that much of the loss associated with the Corrib project.
Statoil’s biggest bang
Relative to the original budget is Corrib field with its overrun of around 400 percent probably Statoil’s largest ever. Mongstad cracker by 95 percent, Asgard by 50 percent and snowy by 47 percent.
– The project is significantly delayed and more expensive than expected, but when it comes on stream by the end of the year, so it will be an important contributor to production and cashflow, adding Rostad to.
He added that the figures in the financial statements previously included in the company’s reporting.
– There is therefore nothing new in the figures, said Rostad .
Corrib project is Statoil’s only development in Ireland, and it has been hotly contested. Aftonbladet has twice visited the area where a gas pipeline with high pressure near the residences on the land, has triggered strong protests. Changes in plans as a result of the protests, has led to many years of delays and millardtap.
The project would have cost 850 million euros, 7.3 billion. Conclusion is between 3.8 and 4 billion euros, between 32 and 34 billion, wrote Aftonbladet earlier this year.
The people get gigantic bill
Statoil reported first an impairment of 1.6 billion in Corrib project in 2010, but has since written down the value further because of the enormous delays and cost overruns.
The Irish taxpayers reeling from this. Companies can write the loss of the treasure.
Like Norway, oil companies can deduct expenses they have had in the development phase, before they start to pay tax on what they earn in production. In Ireland deduction 100 percent, in Norway 78. In case Corrib, with huge cost overruns, must therefore Irish taxpayers axles throughout billion bill.
The tax rate Statoil must pay 25 per cent in Ireland. In Norway the 78.
In a note attached to the financial statements for the project states that the Board considers that the proceeds from the development of the field will be sufficient to make the company profitable in the future.
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– Necessity never
The development consists of seven subsea wells, and the gas will be transported through a pipeline to an onshore processing terminal. From the terminal, the gas via the interconnector Bord Gais Eireann to the existing Irish gas network. Shell is the operator and owner of 45 percent in the Corrib project.
Oil analyst Trond Omdal in Pareto Securities stipulates that Corrib project in Ireland is unprofitable both for Statoil, operator Shell and the Canadian oil company Vermilion. This despite the fact that the agreed contract prices for gas higher than Statoil gets paid for Norwegian gas in Britain or on the Continent. The reason is major delays and cost increases as a result of changed regulatory requirements to the project partly because of extensive local protests.
-We estimate a negative value for the entire project from start time of just over 10 billion after tax, said Omdal.
However, although the project seen over its lifetime is unprofitable, then there is significant residual value in the field when most of the investments are made, according to analysts.
-We estimates Statoil present value after tax of 11 billion for Statoil, and more than 32 billion total for the three companies, said Omdal.
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Low tax revenues
– How much Statoil in taxes?
– Due high depreciation and major loss carryforwards will naturally tax revenue from the project will be lower – about 6 percent of the estimated total revenue from the project.
– Have the protests of local people in Ireland more costly project?
– The project due to delays and kostnadsøkningenr as a result of changed regulatory requirements become significantly less profitable, which affects both the oil companies that have participated in the project and the Irish authorities in the form of lower tax revenues, said Omdal.
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