Statoil’s second quarter results were presented Wednesday morning and was even worse than expected. The net result is now negative, meaning that expenses were greater than income.
The annual income was primarily due to lower prices for oil and gas.
Statoil responds by cutting investment in new projects next year. CEO Eldar Sætre says that downsizing plan so far has not changed, but it is very uncertain times ahead.
– This result emphasizes that little boost from the oil to the pension fund decreases, and that we are approaching the day it stops, said Erik Bruce, chief analyst at Nordea.
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– Should cease to increase next year
He believes the proportion taken back out of the Pension Fund, approaching 3 percent in 2017 and believes it should remain there.
– Oil Monetary use must grow much more slowly than it has done. When the fund no longer grow, we must keep it stable by only using real returns. That means stable oil spending, says Bruce.
The guideline states that the government should not spend the money in the fund, but only the real return on investment. It was earlier estimated to be 4 percent in the long term, but several economists believe that 3 percent is more than enough.
Do government will spend more
– How the world is now, with the prospect of close zero interest rates long and poor economic outlook, it is optimistic that the fund should be put on 3 per cent annually, says Bruce.
Already in this year’s budget spent Government 2.8 percent of oil fund’s returns. Thus, Siv Jensen the first fiansministeren who took more money out of the fund than it came new oil money into.
Bruce think it may be even more next year.
– the weak economy we have now, I think you will continue to increase spending will continue. We may have reached 3 percent already in 2017, he said.
Oil Fund with billion gain on Pokemon Go– Oil revenues have little to say
chief economist at Swedbank, Harald Magnus Andreassen, believes the fiscal rule well could be even slightly lower.
– I’m happy with a level of 3 per cent for now, but in the long run it is much to suggest that the returns may be lower, Andreassen says.
however, he believes that the current low oil revenues have not much to say, because it is not oil we take up now, which means that the fund continues to grow.
– the fund is over 7,000 billion, but it increases not far from the edge. If we get new oil revenue of 100 billion or 200 billion this year do not the big difference between what we can use, says Andreassen.
At least not in the short term. For there are investments that determine how much oil fund grows. In the first quarter of this year also went there in minus.
Oil revenues accounted for 15 percent of Norway’s gross domestic product and 40 percent of exports in 2015. That is not the supplier industry taking into account.
the oil revenues were distributed accordingly last year:
Taxes – 103.7 bn. kroner
State direct financial Interest – 92.7 bn. kroner
Dividends from Statoil – 15.4 bn. kroner
Environmental and land tax – 6, 5 bn. respectively.
Source: Norwegian Petroleum
the Norwegian government makes money on oil in several ways. State’s Direct Financial Interest (SDFI) is the proceeds that come from holdings in production fields and facilities for oil and gas, via the management company Petoro. This income was alone 92.7 billion in 2015.
As a direct stake in one of the world’s largest oil companies receive state also dividends from Statoil. In 2015, this income of 15.4 billion.
Statoil pays dividends to its shareholders its at $ 0.22 per share even if the result was negative in the second quarter this year.
the highest income on oil for Norway, however, the high tax oil companies pay their income. Last year nearly 104 billion.
– “Classy distress”
Harald Magnus Andreassen in Swedbank believes the Norwegian state should get used to spending a lot less of the oil fund in the future. But not right now.
– To tighten while one of our most important industries have big problems, is completely wrong. We could probably have to start “eating” of the Fund as early as next year, says Andreassen.
He recalls that while other countries are in deficit and must take out loans to finance the state budget, has Norway many times their GDP in savings.
– it’s not exactly crisis, it is what we might call “genteel distress.” No other country can extract free money so Norway still does. But we must get used to that the good times are over, says Andreassen.
– No surprise
It is the chief economist at Sparebank 1 Markets, Shakeb Syed agree.
– I think it is quite right to increase oil spending during recessions. The next few years we can fine using both 3 and 4 percent of the fund, he said.
But then it stops. When revenues fall, must also spending down.
– The length of the answer is a resounding no, we can not continue as at present. It’s no surprise that it cut in oil investments, and although profitability is better in the Norwegian oil industry, we must now adapt and curb oil dependence, says Syed.
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