- Crude oil and natural gas production decline as a result of suspension of activities in Libya for several months
- Decline in sales and earnings moderated by positive price trend
- Outlook 2012: significant sales and earnings growth thanks to rising production volumes
Business development in the Exploration & Production business sector was considerably impaired by the events in Libya. In response to unrest in the country, onshore production was suspended in February and offshore production in March. Offshore production did not resume until September, and onshore production was partially restarted in October and gradually increased. At the end of 2011, the daily onshore production rate was at about 50% of the level of volumes produced before the unrest began. Sales in this business sector therefore declined by €637 million to €3,182 million.
The significant increase in the oil price is partially attributable to decreased production in Libya. Compared with the previous year, the average price of Brent crude rose by $31 per barrel to around $110 per barrel. Due to the weakening of the U.S. dollar compared with the euro, the price of crude oil in euro increased by €20 per barrel to €80 per barrel.
Mainly owing to the production shutdown in Libya for several months, our oil and gas production in 2011 declined by 15% to 113 million barrels of oil equivalent (BOE). This figure includes Gazprom’s interests in a German Wintershall subsidiary that holds the Libyan onshore concessions 96 and 97.
Due to the lower contribution from activities in Libya, income from operations declined by €232 million to €1,686 million. This included income taxes on oil production in Libya that are non-compensable with German corporate income tax and which fell by €544 million to €439 million.
In 2011, we completed the drilling of 21 exploration and appraisal wells in the search for new oil and natural gas deposits, of which 10 were successful. Compared with 2010, exploration expenses decreased by €6 million to €184 million.
Proven crude oil and natural gas reserves increased by 3% compared with the end of 2010 to 1,156 million BOE. This increase is primarily a result of the first-time inclusion of volumes from the Achimgaz project, for which we began development of the entire field after successfully completing the pilot phase. The reserve-to-production ratio is 11 years (2010: 10 years). This is based on Wintershall’s share of production in 2011 and refers to the reserves at year-end. We replenished 131% of the volumes produced in 2011.
In 2012, we expect our production volumes to rise as a result of the increasingly stable situation in Libya. We therefore expect a significant improvement in sales and earnings.