The value of the SDFI is estimated to about 1,140 billion kroner

The value of the State’s Direct Financial Interest (SDFI) as of 1 January 2012 is estimated to 1,140 billion kroner. This is the result of the recent  valuation of the SDFI portfolio carried out by Wood Mackenzie on behalf of the Ministry of Petroleum and Energy.

The analysis shows an increase in value of approximately 375 billion kroner compared to the previous valuation of the portfolio in 2010. This increase is mainly explained by assumptions of higher oil and gas prices. The SDFI portfolio would have increased by 72 billion kroner compared to the previous valuation in 2010 had price assumptions remained the same.

In addition to the effect of increased price assumptions, commercial discoveries as Johan Sverdrup and Skrugard, as well as increased remaining reserves in some fields, contribute considerably to the increase in value. The increase in SDFI portfolio value has come despite increased costs in the oil and gas sector.

- The report illustrates the substantial values that the SDFI portfolio represents to the Norwegian State. The annual net cash flows from the SDFI portfolio, which in 2011 was 128 billion kroner, constitute a major contribution to the Government Pension Fund – Global, says Minister of Petroleum and Energy Ola Borten Moe.

Despite the presumption of declining production in the years to come, the report shows that the discoveries and improved recovery from existing fields will ensure the long-term perspective of the SDFI portfolio.

- There has been a significant increase in costs on the Norwegian Continental Shelf. This development illustrates the importance to continue our commitment to reduce costs and to accommodate for the future value creation from the petroleum sector, says the Minister.

The valuation of the SDFI-portfolio is part of the Ministry of Petroleum and Energy’s follow-up of the SDFI and Petoro AS. Petoro manages the SDFI on behalf of the government.

Wood Mackenzie’s report is available from the Ministry of Petroleum and Energy’s homepage.