Norwegian oil giant Statoil ASA (STO) firmly rejected that the option of shutting down a carbon capture technology test facility in Norway is being pondered over to cut costs.
Per the internal documents, management acknowledged that the owners of the facility were investigating the legal repercussions for Technology Centre Mongstad (:TCM) in the event of a closure of the test centre on Norway’s west coast by 2017.
The dominant owners of the reputed project are Statoil and carbon capture agency Gassnova holding 20% and 75.12%, respectively. Other minority partners include Royal Dutch Shell plc (RDS.A) and Sasol. The technology was commissioned in 2012 and has since then been facing annual running costs of NOK 300 million ($48.8 million) amid challenging market conditions.
Statoil also said that while it is not working at reducing costs at TCM like all its other activities, shutting down operations at TCM is not an option as it has obligations for TCM deliveries in 2017. Statoil intends to honor its obligations completely.
In recent times, Statoil has delivered strong exploration results, adding significantly to its resource base by making several high impact discoveries. The latest finds give the company access to new regions of Norway, Russia, Azerbaijan, Tanzania as well as Australia. These strengthen the company’s position and pave way for profitable long-term growth.
Statoil aims to achieve equity production of above 2.5 million barrels of oil equivalent in 2020. The growth is expected to come from new projects from 2014 to 2016 that would result in a compound annual growth rate (CAGR) of 2% to 3% for the period 2012 to 2016. The second stream of projects is expected within the 2016−2020 period that would likely lead to a CAGR of 3% to 4%.
Statoil carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the oil and gas sector include Matrix Service Co. (MTRX) and NGL Energy Partners LP (NGL). All these stocks sport a Zacks Rank #1 (Strong Buy).