Okay. Ladies and gentlemen, good morning. My name is Peter Hutton. I am head of investor relations at Statoil. I would like to thank you very much for joining us at our socially responsible investors day today. Safety and sustainability is at the heart of all we do at Statoil, and while we have spoken about these topics in some detail in our capital markets days and on other occasions, this is actually the first time that we have held an event specifically on this topic, before. Here with us, we have got presentations from Eldar Sætre, our chief executive officer, Bjørn Otto Sverdrup, head of sustainability, Irene Rummelhoff, who is head of our New Energy Solutions business, and Hans Jakob Hegge, our CFO. Each of these presentations will be for around 15-20 minutes.
That will take us to around 11:20 A.M. or so. That will leave us around 30-40 minutes of questions and answers that we will do from the floor, and possibly, if we have time, from any people dialing in, because this is also being webcast live as well. There will also be an opportunity for discussion with the members of the team and the management who are here, after the event, which should finish formally around 12:00 P.M. Okay? Now, as I said, safety is our priority. Before I start, I would like to read a short but very important safety announcement. Please listen carefully before I introduce Eldar. The evacuation signal is a voice system announcement. Please note that we only evacuate the building should the voice announcement say to do so.
You may hear numerous other messages, such as, "We are investigating a problem" or, "We may need to evacuate." We would ask that you continue the event until you hear the message, "Please leave the building immediately." We would ask that you use the fire exit within the venue, which are signposted. Please follow the lead of the ECT venue staff, who will be coordinating the evacuation. Please note, fire curtains will drop for your safety in front of the main venue entrance between the north and south wing of the atrium. Please make your way to the assembly point situated on Bartholomew Close. Okay. With that, let me get the event underway and ask Eldar to make the first presentation. Thank you very much.
Thank you, Peter. Good morning, everyone, and welcome. Today is actually our very first socially responsible investors day. Why do we think being a socially responsible company is critical to our business and our value creation? To me and the board of directors, the overall context is simple. If you want to secure a long-term prospective future for your company, if you want to attract the right people, young people, talents to your company, if you want to thrive through the energy transition, you need to behave, you need to act, and you need to be perceived as a socially responsible company. In order to perform well in today's pretty complex global context, being socially responsible is not only good for business, it is in fact essential for business. Last year, we presented our corporate strategy, Always Safe, High Value, Low Carbon.
Our people and their safety always come first. It defines us as a company, it defines our leadership, and it starts with me, myself, as the CEO. In fact, our whole corporate culture is founded on a strong personal commitment from everyone to the safety of our people and the integrity of our operations. I hear quite often safety being referred to as a cost driver, something which is inconsistent with cost efficiency. In my experience, it actually works the other way around. Our serious incident frequency for the last 12 months was at 0.5, which is the best we have ever had as a company. This has taken place during a time where we also have seen some pretty efficient cost improvements.
Passion and relentless attention to safety supports cost efficiency, and cost efficiency supports safety, because quality and simplicity and technology is really the underlying key driver for both. High value is our second strategic goal. Only four years ago, the opportunity set in front of us had a break-even oil price of around $70 US dollar per barrel. At this year's, in February, capital markets update, we told you that the break-even price for the next generation portfolio, 3.2 billion barrels was now at $21 . In 2013, we needed $100 per barrel to be cash flow neutral. Now we do the same well below $50 US. Our third strategic goal is low carbon. Man-made climate change is happening and will have dramatic effects and consequences if we fail to stop it. That is not something we discuss, dispute within our company.
Instead, we act upon those facts and integrate it into our strategies and into our decision-making. We should all admit that climate change is an enormous challenge. Fossil fuels have been instrumental in developing society as we know it today. However, we are in the middle of the most comprehensive transition of energy systems since the Industrial Revolution. That means phasing out coal in the energy mix and doing it forcefully. Replacing coal with natural gas with immediate positive effects on emissions. Develop more renewables at scale and with speed, and also burning less oil than today, while at the same time producing it with the lowest possible carbon footprint. Some see the energy transition as a threat. We take another view. For us, this is an opportunity where we have a competitive advantage. Why do I say that?
The global average emissions from oil and gas production is currently at around 17 kilos per barrel of oil equivalent. At Statoil, we already produce oil and gas at around half of that, nine kilos per barrel. Maybe to the most exciting news of today. The CO2 emissions of the projects in our next generation portfolio of NOK 21 US breakeven will be around three kilos per barrel. That implies, on 100% basis, 8 billion new barrels of energy that the world actually needs with less than one-fifth of the global average emissions. To me, that is a demonstration of why it matters which resources we produce and how we produce those resources. Also why oil and gas has to be an integrated part of the energy transition. I must admit, I did not plan to quote Marx today on an Investor Day. Why not?
Groucho Marx wrote about a guy who said, "Those are my principles, and if you don't like them, well, I have others." I can tell you, there are countless temptations to cut corners in an industry like ours. However, the beauty of the quote also tells us that and demonstrates the importance of having some key principles, and I would say non-negotiables in place. The world is constantly changing, which makes sustainability a dynamic and a continuous effort. Something which therefore needs to be embedded in your DNA, and also firmly anchored in the corporate governance structure, all the way from our board of directors to the sharp end of our business. Sustainability is about much more than policies, strategies, and procedures. It needs to be an integrated part of our values, our culture, our governance, leadership principles, decision-making processes, and obviously also our risk management.
That's why it is also reflected in our remuneration system. 50% of our leadership's variable pay is based on deliveries. In my case, that includes safety performance, value creation, and carbon intensity. The other 50% is based on our leadership behavior, how we live our values, how we collaborate, and also how we adhere to our code of conduct, 50%. Our company has, through its history, been, we say, exposed to various types of experiences that has fundamentally shaped how we run our business. We have learned the hard way, and the core of these lessons is that openness and brutal honesty, collaboration, courage, and caring for people and society is the only way to run a business and to continuously improve. It should be no coincidence that these lessons are also reflected in the four values of our company.
I have seen what happens if integrity is compromised. I can assure you that is not a place a CEO or a company or any of our employees wants to be. A key part of my leadership is therefore to be crystal clear on expectations that in Statoil these are our principles and is not an option to have others. Occasionally, I get this question: What keeps you up at night? After quite a few years in this industry, I must confess there is not very much left to do with the capacity to do that, but safety is that one single thing. The core of our philosophy is the I Am Safety Principles, which means that safety is a personally felt commitment for everyone across the board in Statoil.
It starts with my own, my commitment, and the impact I can make by placing safety very firmly in a visible way at the top of my agenda, and also not only agenda, but my actions. One of these actions is to award annually the CEO Safety, Security and Sustainability Award, promoting role models, good performances, best practices. Sometimes these efforts are about creativity, innovation, like the replacement of nozzles on Gullfaks B that saved NOK millions and also half the use of chemicals in our operations. Other times it is about the entire work culture in a team, workforce, like the Gina Krog project that had 15 million work hours without any serious incidents. Hans Jakob will touch upon two other examples, which were actually also the winners of this year SSU Award.
Seen from a bird's eye perspective, the future of energy contains some obvious dilemmas. One, the world urgently needs lower CO2 emissions. I was in Paris during the international climate negotiations and was excited to support and finally also applaud the historic breakthrough. It is a truly ambitious agreement, but also a call for forceful action from politicians, obviously, but not the least from industry, which I believe in the end will have to do most of the job. Two, the world also needs more energy. The planet is getting populated with more people, they live longer lives, and expect a higher standard of living. That is a good thing, but it leads to point three. Within any realistic future energy scenario, the world will need significant volumes of oil and gas for decades.
However, if the most carbon-intensive fossil resources are prioritized and produced, we have no chance whatsoever of reaching the goals of the Paris Agreement. That's why coal, as I mentioned, needs to be replaced, and that's why Statoil is not exploring for heavy oil. Our aim is to find, to develop, and to produce new resources with ever-lower carbon emissions. As we have set out in our climate roadmap that Bjørn Otto will revert to in a minute, improving our current operations is the most significant thing we can do right here now for climate, simply because of the scale and the impact of our industry. We had a goal set for 2020 on the Norwegian Continental Shelf to reduce our annual CO2 emissions by 1.2 million tons. We reached that goal in September 2017, which means that many of the low-hanging fruits have already been captured.
Still, our updated goal is another reduction of 3 million tons by 2030, and two-thirds of that is going to come from the Norwegian Continental Shelf. That increased ambition equals removing 1.5 million cars from the roads or almost two out of three cars from the streets of London, which I'm sure you wouldn't mind. As you may know, we are also a leading company in operating some of the largest CCS projects worldwide, having captured and stored around 23 million tons of CO2 to date from the Sleipner field and the Snøhvit field on the Norwegian Continental Shelf. In our view, CCUS is critical to meet the ambitions from COP 21. In fact, I haven't seen any credible future scenarios that takes us below two degrees global warming without it. The world is lagging seriously on new CCS projects.
More action is therefore urgent, both from policymakers and from industry. Statoil has decided to evolve from a focused oil and gas company to a broad energy company, where also renewables increasingly becomes an important part of our portfolio. It is truly fascinating to see how the experience of our oil and gas engineers can be put to use in projects like the offshore wind floater Hywind. Irene will talk more about this soon and also touch upon some other aspects of our focus on New Energy Solutions. Renewables has opened up a whole new set of opportunities for value creation for our company, while also diversifying our portfolio, making it more resilient, both strategically as well as financially.
Our plan is unchanged to invest 15%-20% of our capital expenditures into renewables by 2030, provided that we continue to access and develop sufficiently attractive projects. I think the best way to illustrate our journey is with this slide and message. Statoil's Board of Directors has recently proposed to the AGM to change the name of the company to Equinor. Which means, by the way, that this is probably one of the last major presentations I will do as the CEO of Statoil. Why did we propose to change our name? It's not something you do easily. It is not because we are about to change our strategy, not because we are not proud of our legacy, our history, or producing oil and gas.
It is simply because we needed a name that in a much better way reflects our current strategy and what it means to be an integrated part of the energy transition. Equi is the starting point for names like equal, equality, and equilibrium, referring to how we see, how we respect people, communities, society, and how we view energy and nature. Nor is signaling a company proud of its Norwegian origin. We are the same company with the same people, same competence, and soon we will have a new name that works for us, that helps us on the journey from a focused oil and gas company to a broad energy company. To summarize, modern companies have to understand, they have to engage with, and be part of the societies in which they operate. Sustainability is at the core of our strategy, of our governance, and our decision-making.
We want to create solutions, not problems, and we want to shape the future of energy and shape our future. I'm convinced that sustainability is not only here to stay, it is here to prevail. This is our first SRI Day, but I can assure you it is not going to be our last. Now I will leave the word to Bjørn Otto. Thank you very much for your attention.
Thank you, Eldar. Hi, good morning, everyone. Environmental and social performance with good governance is a key foundation for profits and long-term value creation. Today is also an invitation. It's an invitation to you for a dialogue about your expectations to us, and we can share with you our both performance and targets. That's why it's so great to see so many of you here today. Welcome. Like Eldar said, sustainability is part of the strategic priority for the group. The function that I'm leading is actually a part of the Strategy and Business Development Business Area as a whole, signifying that importance. We recognize that Statoil and business at large have an important role to play to address the broader issues of our societies, to help find solutions to the UN Sustainable Development Goals, and also to help support the ambitions of the Paris Agreement.
In its simplest form, sustainability is about how we manage our relationship to society and to nature. Sustainability is an integrated part of the company's purpose, strategies, risk management, and decision-making processes. It is, in short, part of our management system fundamentals. We use systematic analysis of all significant environmental and social and safety-related aspects, set targets, implement measures to improve. We report openly, clearly, and reliably on all material issues and impacts. It is indeed our ambition to continue to be an industry leader in the area of sustainability. Today, I would like to share with you our performance and strategy. Firstly, I will talk about people and communities. I will move on to the environment and the emissions management. Finally, I will zoom in on our climate roadmap. The starting point for all good performance is our own people and our own employees.
We believe how we work and how we collaborate is a source for competitive advantage. We strive to be a great place to perform and a great place to develop, emphasizing empowerment and collaboration. Diverse team achieve better outcomes. Diversity in nationality, education, and background. We strive to increase the number of women across the workforce. In total, around 30% of our staff are women. 36% of the top 3 level leaders, senior leadership positions, are held by women. In the corporate executive committee, that number is 27. 40% of our board members are women. We are not yet where we'd like to be. The energy business, and I might add banking, is still too male-dominated. Our commitment to people, however, goes beyond our own employees. Our operations affect people and can affect people's fundamental rights, human rights.
Statoil was among the first companies to commit to the UN Principles on business and human rights. Our policy clarifies this commitment. Adverse impacts on human rights shall be avoided, and grievance mechanisms should be in place. We engage with suppliers and communities to avoid violations. We run dedicated capacity and competence building among our own employees. Indeed, 3,800 of our employees have been trained, including the entire procurement organization. Statoil creates large economic value and benefits for societies. We deliver affordable energy to millions of people every day. Our products play a key role in people's lives. Our business is a cornerstone in communities and countries. Last year, we spent NOK 18 billion on goods and services, and we create many quality jobs and positive ripple effects. Around 30,000 contractors work for Statoil, adding to the around 20,000 own employees.
The activity generates significant revenue for host governments. In 2017, we paid NOK 9.6 billion to governments. We disclose openly our payments, and have done so for more than a decade to promote transparency, a key currency for trust. In 2017, dividends declared were NOK 2.9 billion, and the retained earnings were NOK 2.4 billion, enabling us to develop the business further. Let me now turn to how we strive to make sure that we do this while showing environmental stewardship. In line with industry practice, we report all environmental data on 100% basis with our operator. We report all spills, including the smallest ones, in order to learn and to improve. Last year, the total volume of spilled oil was 34 cubic meters. That is around 214 barrels of oil of the more than a billion produced. Still, it is 214 barrels too many.
The International Industry Association, IOGP, each year publishes benchmark on performance on a number of environmental indicators such as SOx, NOx, waste management, greenhouse gases. Statoil is among the leading on nearly all, and you will see that in our sustainability report. The foundation for responsible operations is solid risk awareness, deep understanding of the environment, biodiversity, and physical conditions. We combine this with technology, training, and strict operational procedures. We help support even new science. For instance, in mapping cold water corals, sampling, testing, and in the study of fish and bird populations. Indeed, the picture here is from a seabed monitoring laboratory Statoil helped establish, which helps scientists to increase the knowledge of life in the oceans with live stream on data. You can follow that live from your computer. It's openly accessible.
We care about the oceans, and we are proud to be invited to lead the new UN Global Compact Action Platform on the oceans. We have a strong tradition of coexistence with fishermen and fishing communities in Norway, Brazil, and in the U.K., in particular on Statoil operations. This give us license to operate, and it also allow us to run effective operations. A more novel example is the installation at the offshore wind farm outside Germany, where we used new air curtain technology to remove sound waves while we did the piling, showing care for life below water. Statoil operates 38 offshore installations and have drilled more than 1,500 wells on the Norwegian Continental Shelf without any discharge with significant negative impact on the environment. Many pay particular attention to activities in the Barents.
We realize that in the northern parts of the Barents, year-round oil and gas operations are not feasible or commercially viable for now. We do not operate there. We do, however, operate in the southern Barents Sea, where you find typically ice-free waters. That's on the top area of this map. An area which is actually less challenging in terms of weather and waves than many other parts of the Norwegian Continental Shelf. We have operated here for 40 years. We drill more than 100 wells and never had any accidents or discharges to sea with significant negative impact. Contrary to the commonly held view, the area does not need to be high cost. The Barents wells we completed in 2017 were actually among the cheaper ones we drilled in 2017, and the new Johan Castberg field will have a break even of $31. Statoil is a large offshore operator.
In the last decade, we have also developed a sizable onshore activity, particularly in the U.S. The shale has been a fantastic resource story, providing cheap, secure, and cleaner energy to the U.S., helping U.S. emissions down. Yet the onshore has its own challenges. We work with other companies to develop standards and practices for responsible shale operations. We work to improve well pad design, fewer above ground oil tanks to remove the risk of spills, more pipelines to limit trucking and avoid flaring, and use solar panels when feasible. A particular concern has been fracking and the use of chemicals and water. We openly disclose the chemicals we use and develop technical solutions to reduce the use further. Statoil operates no oil and gas production in areas with high or extreme water stress.
Communities and regulators are involved early in the planning of activities, and local water districts regulate the water usage. We do not use quality drinking water in our operations. Finally, flaring. In the Bakken, in particular, we struggled in the first years with flaring. Over the last years, we have been able to bring flaring down with around 70%. We are also now exploring new and exciting technologies to use and store CO2 in the reservoirs in Bakken. Early tests have shown increased recovery, less water usage, and permanent CO2 storage. As the world demands more energy, it also demands that more energy is produced, delivered, and consumed in new ways with fewer emissions. To change patterns of emissions and to drive energy transition, that takes time, and it requires a long-term perspective, dedication, and leadership.
We believe that our strategy, always safe, high value, low carbon, will make Statoil more resilient towards future regulations, give us better opportunity sets, and help us attract the talents we need. We have been on this journey for quite a while. We've been a subject to a CO2 tax since 1991. We supported the 1997 Kyoto Agreement. 10 years ago, we committed to become an industry leader in carbon efficiency and set actually ambitious targets that Eldar referred to. I think it's right to say the corporate strategy and the climate roadmap presented in 2017 was a step change, setting clear targets and new ambitions for how Statoil is approaching the energy transition. Our climate roadmap is about reducing our own footprint, growing in New Energy Solutions, and capture growth opportunities, and making sure that we embed climate considerations in all our decision-making.
The climate roadmap is more than targets and ambitions. It is part of a broader and deeper change. Our employees are invited and empowered to drive technological, commercial, and operational innovations. We have trained leaders on climate science, raised the awareness of employees, and run group-wide climate ambassador programs. We run energy-efficient operations. Carbon intensity that is kilo CO2 per barrel of oil equivalent produced is the most meaningful metric to express performance. It's a number we disclose in our quarterly financial results. Last year, our carbon intensity for Statoil-operated production was nine. Industry average is nearly twice as high. On an equity basis, the number is 12. It is good, but we know we can do even better. Our 2030 target is eight kilos CO2 per barrel. It's a very ambitious target given we have many aging fields.
We are on track to achieve our 2030 target of reducing overall emissions with three million tons. Last year, we achieved 12% of that alone. We seek operational improvements and new technology steps, both small steps and bigger leaps. We have exited oil sands operations and stopped exploration for heavy oil. Hans Jakob will share more about the performance. We have developed low carbon power solutions for Troll A, Johan Sverdrup, and many of our plants, allowing them to be run mainly on renewables. Recently, we have searched for new value-creating power solutions for other installations, and we have been encouraged by the findings, and we now work with our partners to mature several new projects that if successful, we will save costs, improve value, and remove significant volumes of CO2 each year. Good climate performance also depends on limited flaring.
We are committed to zero routine flaring by 2030. We are getting very close. Last year, flaring was at 0.002 tons per unit produced, around a fifth of the industry average. Natural gas has an important role to play in decarbonization. Natural gas emits half of the CO2 burned compared to coal and has much less particles than other pollutants. Equinor is a significant supplier of natural gas. Since we're in London, I think it's worth celebrating that Britain's CO2 emissions have been reduced by more than 30% since 1990. Actually, it's the level of 1894. Natural gas has enabled less use of coal and the introduction of intermittent renewables. Equinor takes great pride in this since we're both a significant, the most dominant exporter of gas to the U.K., and also have contributed to develop the offshore wind.
As Eldar mentioned, CCS is another key technology. At the Sleipner and Snøhvit field, we have for many years now captured CO2 and given the industry valuable CCS experience. Irene will talk more about our offshore wind as well as the long-term outlooks for natural gas and CCS. To ensure the climate benefits of natural gas, methane emissions must be limited. Equinor is committed to work towards near zero methane emissions from the gas value chain. Let me share with you some numbers. As you see from the chart, for the upstream and midstream part of the value chain of piped gas to Europe, which we control, the methane leakage rate is very low, only 0.02%. Significantly lower than industry average. The main reason, strong safety focus, subsea pipelines. If we include the total value chain, the number is 0.23.
90% of the emissions occur downstream after it has left our fence. We work with the Oil and Gas Climate Initiative and distributors to address that challenge. The numbers show the benefit of gas from Norway compared to coal, way below the 3.2% threshold leakage. For operations in the U.S., the leakage rate is 0.08%. Here, our teams have removed the largest methane emission sources. We use sophisticated infrared camera and laser technology that we put on drones that allow us to combat emissions and establish a very precise baseline. The climate roadmap is an invitation to suppliers, customers, governments, and peers to help shape the future of energy. We know that when you cooperate, amazing things can happen. For instance, in the large-scale maritime operations that we run. Two examples. Equinor has around 40 to 50 supply vessels in operations every day.
In 2017, we contracted seven new supply vessels, all with batteries and hybrid engine systems, running very much like your own hybrid car. Plug it in. We have now also embarked on the cargo vessels. Around 90 are sailing each day, every hour of the year for Equinor. Recently, we contracted six new tankers. Four will be run on LNG and two on LPG, the first of its kind. Both initiatives reduce fuel costs, reduce emissions, and will contribute to greener shipping. That is good. The energy transition will depend on companies, citizens, and governments to show leadership working together. We believe dialogue and continuous engagement is important to help shape the future of energy. Equinor will continue to call for effective carbon pricing as the best tool to achieve emission reductions on a large scale and in a cost-effective way.
We have teamed up with peer companies, including in the OGCI, to help shape the industry's climate response. We have worked closely with the Task Force on Climate-related Financial Disclosures, and we welcome their ambitions. Indeed, we believe our practices since 2015 are very much in line with the spirit of the TCFD. We work with NGOs, local communities, national governments, international institutions such as the UN. We work systematically with sustainability, and we have a strong performance and high ambitions. Yet, we know that we do not have all the answers, and it's the dialogue with you and others that will be important for us to help continue to improve. I would now like to leave the floor to you, Irene, and thank you for your attention.
Thank you so much, Bjørn Otto, and good morning, everyone. You've heard from both Bjørn Otto and Eldar that the world is changing, and so is Statoil. I would like to spend some time initially trying to demystify this energy transition that everyone talks so much about. Energy is quite often misunderstood. A lot of people talk about energy as if it is the same as power, but energy is so much more. In a simpler way, you can say that we use energy to transport people, cars, goods, we use energy to heat our homes and industries, and we use energy to come up with power. In today's environment, we see sure signs of a revolution within the power sector. Solar and wind cost reductions are coming down and are being installed at record pace.
We also see some, I would say, sure hints and signals that there will be a similar revolution within the transport sectors when it comes to electrical vehicles. These two trends are happening not because they're driven by politicians or regulations. I would argue they're happening because it is the cheapest and quite often the best solution. Take battery cost reduction, for instance. They've come down tremendously, and within the 5 to 10 years, anyone, anywhere in the world can probably buy an electrical car that is cheaper than a traditional car. That commercial tipping point, I would argue, is so much stronger than people's environmental consciousness that it will probably lead to exponential growth. Within the power sector, solar and wind are already beyond this commercial tipping point. We've seen costs come down with 70% since 2010.
Some people argue 90. Either case, it's tremendous. In market after market, solar and wind is the cheapest way to produce electricity. Even in the U.K., we have now seen the first unsubsidized solar park. In the last few years, we've also seen tremendous cost reduction within offshore wind. Take our own two projects. From Sheringham Shoal in 2012 to Dudgeon in 2017, we saw a reduction in the levelized cost of energy with about 40%. Further cost reductions have been very clear in recent offshore wind auctions, confirmed, I think by four zero-subsidy bids in the Dutch offshore wind auctions in December 2017, among one of the bidders was Statoil. As a result of these cost reductions, renewable energy is making a serious inroads on a global basis.
Over the last couple of years, two-thirds of all new net power generation capacity on a global basis were either solar and wind. The same number in Europe was actually 90%. In 2017, we also saw a new record for installed offshore wind capacity of 3 gigawatts in Europe. What is Statoil doing about this? There is no doubt in our mind that oil and gas will be in demand for the next decade, we also strongly believe that the renewables such as solar and wind will be the fastest-growing source of power generation going forward. As Eldar alluded to, you could look upon this as a threat, we could choose to see it as an opportunity to transition a lot of the competence that we have developed in the oil and gas sector into a new source of value creation for Statoil.
As the largest oil and gas operator in the world, or offshore operator in the world, offshore wind was a natural step out for Statoil. We also saw that this was a segment with complex projects which led to high entry barriers and robust returns. We have a lot to contribute to this sector. The oil and gas sector over the last 50 years spent a lot of time developing a very sound safety culture, which Eldar alluded to. This is equally important in the offshore wind sector. The projects in this sector are complex and our marine installation capacity, operation capacity, modification capacity really serves us well. I would like to dwell a little bit on how we can take advantage of our local global presence and also our corporate capabilities. Take U.S., for instance, a growing and emerging hotspot for offshore wind.
We have had people in Houston for more than 15 years working with the supply industry, preparing ourselves for this. We have had people in Stamford selling gas to the same utilities that we will buy our power for over 30 years. I think that clearly gives us an upper hand. The New Energy Solutions team is currently only 200 people, we draw upon a fantastic flexibility of the larger Statoil system. Last year, we had 1,500 individuals outside the New Energy Solutions, but still within Statoil contribute to our projects part-time. We have specialists on everything in Statoil. I am even getting surprised. If I need someone to help me with HVDC lines, I call the Johan Sverdrup team. If I need an expert on the German power market, I do call the gas traders, and they know that.
That flexibility is quite unique, I think, to Statoil, and it is hard to see the same thing in a smaller renewable company. I would also like to dwell a little bit on our history of bringing new technology and innovation into our projects. I think the Hywind Scotland project is probably the best example of that. It took us 17 years from the original idea to we actually had the first park in production. I like to see the startup that could actually afford such patience. I strongly believe this industry needs large companies like ourselves, with the move towards more and more merchant risk, financial robustness will play an ever more important role. 2017 was a very exciting year for Statoil.
We exited the year as an operator of three wind farms in the U.K., adding up to a total of 750 megawatts, with the capacity of supplying about 650,000 households with clean energy in the U.K. We're also establishing ourselves in Germany, with one of the world's most experienced offshore wind operators, E.ON, through our Arkona project. All of these projects were sanctioned with internal rate of returns in the order of 9%-11%. Given the risk-reward picture, we see these as really attractive investment opportunities. In October 2017, we put in place the Hywind project, first floating wind park in the world. Currently, we're adding battery capacity to that in the project that we call the Batwind project. This will give us a unique insight and ability to develop the commercial and the technical solutions to allow us to add full-scale battery parks to huge projects going forward.
We also have a significant pipeline that we're quite proud of. Dogger Bank is the largest consented offshore wind park in the world. The strategic importance for that project to the U.K. and to Statoil cannot be overestimated. It has the potential to deliver more than 5% of the electricity that actually U.K. needs. We're working this together with our partner SSE really hard and aiming to bring this forward for the next CFD auctions in the U.K. in 2019. We're also very excited about our project in the U.S. that we call the Empire Wind. It's an offshore wind license with the potential to produce about a gigawatt of offshore wind. New York has set themselves extremely ambitious targets with respect to renewable generation capacity, 50% in 2030, and they've said that they're going to solicit the first offshore wind power in 2018.
Good news, we have the only offshore wind project in New York right now. That should put us in a good position to commercialize this project. We recently made an entry into Poland through two projects with a total of 1.2 gigawatt equity to Statoil. Poland is not a well-established offshore wind market, but it's a very interesting market because it's one of the few markets in Europe where we expect to see energy demand grow. It also has the tremendous potential to develop a significant supply industry that we aim to take advantage of. I'd like to dwell a little bit on floating. Why are we so excited about floating? It is because bottom-fixed offshore wind has its limitations. You can only use bottom-fixed offshore wind turbines in water depths down to 50 meters.
If you look at where the world's wind resources are, 80% of the wind resources that you can reach from shore are in water depths deeper than 50 meters. With the floating concept, you basically open up every single coastline in the world for offshore wind. We're working very hard to mature our offshore floating projects. We have an exciting one that we're working on in Norway, trying to combine floating offshore wind with oil and gas installations, helping reduce the 3 million targets. We also see exciting opportunities in countries like France, Ireland, West Coast U.S., and not the least, Japan, where we recently opened a country office. I'm also happy to share with you that the operations of our existing fields are doing really well. Actually, totally outperforming, totally was maybe a strong word, our expectations when we sanctioned this project.
Availability on Sheringham Shoal has been 97.5%, and the capacity factor on the Hywind Scotland project has been 65% since startup. As you might know, typical capacity factor for onshore wind is in the 30%, if it's a good project, and 40%-50% if it's a good offshore wind project. That's quite an astonishing achievement, knowing that the project has been through two hurricanes in that same period. Last fall, we also entered the solar business. You might ask why. I think the simple answer is that we've been watching the development in the solar space for quite some time, what's happening is quite amazing. The costs are coming down, outcompeting any other technology, solar will be a very important part of the energy mix going forward. Being a broad energy company, we just cannot afford to ignore it.
We've chosen a careful entry strategy. We've said we're going to go with established players and focus on regions where Statoil is already present. That's exactly what we did in the Apodi project in Brazil. We went with Scatec Solar, a Norwegian, very experienced solar developer, we heavily relied upon our local resources in Rio to help us do all the due diligence and also help us develop this project. We have, for instance, the safety manager from our Rio office is up there Overlooking the operations right now. We're going to continue to look for solar opportunities in Latin America, but also in other Statoil regions. Going forward, we strongly believe that these bundled solutions where developers are being asked to put together different technologies to provide a more predictable power flow and an affordable power flow will be important.
I think Statoil is uniquely positioned to actually combine gas and renewable right now. Adding battery competence and solar competence to our toolbox will even strengthen our value proposition in such a future scenario. Renewables are a fantastic means to decarbonize the power sector. However, it cannot be the only solution because of the intermittent nature of solar and wind. Gas, as of today at least, is the perfect companion for renewables due to the intense flexibility that you have in gas-fired power plants. Take another segment, the heat segment. Gas offers tremendous flexibility when it comes to seasonal demand patterns. Quite a telling example is the seasonal flexibility that gas provides into the U.K.
If you were to replace that flexibility with batteries, you had to install 500,000 of the currently, the largest battery parks that have been installed in the world, 500 times the battery park that Elon Musk has installed in Australia. That says something about the challenge we're facing to use renewables as the only means to solve and decarbonize some of the energy segments. I'm not going to argue that we have all the solutions, we're trying to take responsibility also for the longer term and look into how we can actually green the gas or decarbonize the gas, because that will be needed at some point in the future. Eldar and Bjørn Otto talked about carbon capture and storage. We have a long history, we aim to continue that history.
Currently, we're working together with Total and Shell to do a feasibility for the first full-scale CCS project that will capture CO2 from industry. Industries such as steelworks, cement factories, waste management, they don't have an alternative. They cannot get rid of the CO2 if they switch to renewable energy because the CO2 is coming from the chemical processes. As of today, there's no other solution for 25% of the CO2 that is being emitted in the world than carbon capture and storage. We're very excited to be part of that. With a CO2 storage in place, we have the ability to convert our natural gas into hydrogen. You can split the natural gas into hydrogen and CO2 using steam methane reforming, a well-known technology. If you store the CO2, you have converted your gas into an emission-free gas.
The beauty of hydrogen in a gas form is that you can basically use it in all the same segments as you're currently using natural gas. One of the projects that we're working together with Nuon and Gasunie in Netherlands is to convert a CCGT, gas-fired power plant, to run that on hydrogen. It's very simple. You just have to change the boiler. This project and similar project has a tremendous impact when it comes to CO2 emission reductions. That one project can take away the equivalent amount of CO2 as 2 million cars, one CCGT if we succeed. We're also looking at using the gas distribution network in the city of Leeds here in the U.K., convert that to be run on hydrogen.
We do believe that liquid hydrogen would be, and is a viable solution to decarbonize the heavier parts of the transportation segments such as shipping, for instance. Large companies might not, at least not always, be the best incubators for new ideas. Recognizing this, we set up what we call the Statoil Energy Ventures Fund, a $200 million U.S. fund that intends to help startups with equity injections in the order of one to $20 million. We intend to spend that over four to seven-year period. Our goal is to be a good partner with startups, entrepreneurs, disruptors, and innovators, and help them and ourselves to shape the future of energy. Summing up Renewable energy is and will continue to be an integrated part of Statoil's business.
We have an expectations to spend about NOK 100 billion toward 2030, given that my team can come up with the right opportunities. Please wish us luck. With that, I'd like to introduce our CFO, Hans Jakob. Thank you.
Thank you, Irene. Ladies and gentlemen, good morning. It's good to see you all. We have a clear direction, always safe, high value, low carbon, moving towards becoming a broad energy company. Sustainability is at the core of what we do, and it makes sound commercial sense. We have a portfolio which is both low cost and low carbon on our existing production, and even more so on our next-generation portfolio. This was reconfirmed last week when we presented our solid first quarter results. Very strong cash flow of NOK 6 billion after tax. The strongest quarter since the first quarter 2014, then with an oil price of $100. We clearly see the results of our improvement work. From a lower cost base, we create more value at higher prices. At the same time, we are making progress on our safety performance with the lowest recorded serious incidents frequency to date.
Let me now take a longer-term perspective and elaborate on how we integrate sustainability in all our business decisions. We are shaping our portfolio to be resilient, balanced, and distinct, guided by four strategic principles. First, our ability to generate cash at all times. We have reduced our cost base significantly, and we are top quartile on unit production costs. At the same time, we have improved the regularity at our installations. As a result, we are free cash flow positive, well below $50 per barrel. We have long-life assets like Troll, Mariner, and Sverdrup, which all will generate considerable cash flows for decades to come. Second, the CapEx flexibility. Our onshore assets in the U.S. can be scaled up and down depending on macro and market conditions. Our large share of operated projects allow for timely sanctioning of investments.
Third, we have used our capacity to act counter-cyclically and have actively managed our portfolio, pursuing value-enhancing transactions, such as acquiring a 25% stake in the Roncador field in Brazil and targeting a larger share and operatorship of Martin Linge in Norway. We've also captured and locked in market effects. Awarded NOK 40 billion in contracts since 2015, all with contract structures that enhance performance. Finally, we are building on our low-carbon advantage, growing our renewables portfolio, and actively working on reducing emissions from our oil and gas business. By applying these principles, we are shaping a high-value, sustainable portfolio with a low carbon footprint. First, let me start with our oil and gas fields that are in production. Not only do these assets provide resilient and valuable cash flow, but piped gas is the lowest-emitting hydrocarbon source and an important contributor to replacing coal.
About half our production and half our reserves are gas. In addition, we continuously work to reduce CO2 emissions. During last year, we brought emissions per barrel down by 10%. Currently, the CO2 intensity is nine kilos CO2 per barrel of oil equivalent, half the global average, and our target is eight kilos in 2030. Secondly, we have one of the best opportunity sets in the industry with our next-generation portfolio. With a large operated share, we can shape low-cost and low-carbon solutions in the design of the projects. This portfolio consists of 3.2 billion barrels of oil equivalents net to Statoil, of which 35% is gas, with a break-even on average of $21 per barrel, including CO2 taxes both on the NCS and internationally. This is the number of the day, I think.
The CO2 intensity is only three kilos per barrel, less than one-fifth of the global average. Thirdly, we are leveraging our core competencies within oil and gas to build profitable new energy solutions. Our offshore wind portfolio has an attractive risk-reward profile and competitive real returns of 9%-11%. By 2030, we expect that 15%-20% of our CapEx will be within the new energy solutions, given continued access to attractive returns. Our ability to generate cash at all times is fundamental in enabling us to invest in new projects. Due to the robustness we have achieved, we expect to generate NOK 12 billion in free cash flow after investments and after dividends in the period until 2020 at USD 70 oil price. Let me share a few examples on how we have been reducing CO2 emissions in our portfolio.
As an oil and gas field gets older, the natural pressure in the reservoir drops. To recover more hydrocarbons and get this to the platform, compression is required. The closer to the well the compression takes place, the more oil and gas can be recovered. This was the situation we faced at Åsgard some few years back in the Norwegian Sea. Compressing gas on the existing platform was not an option due to weight limitations. Building a new platform would have increased the CO2 emissions by 90,000 tons per year. Instead, we developed technology to compress the gas at the seabed close to the wellhead, and three years ago, I'm proud to say, we installed the world's first subsea gas compressor. More than 40 technology qualifications have developed and been put to use.
These technologies have extended the reservoir's life to 2032, boosted recovery by 300 million barrels, and reduced the carbon intensity by almost 50%. This project is the first step to realizing an energy-efficient subsea processing plant. I have a special affinity for our Hammerfest LNG plant, as I used to run it as head of operations north in Northern Norway. I'm pleased to say that Hammerfest was awarded the CEO Safety, Security and Sustainability Award this year, together with the SSU Award, going to the team that the development of earplugs that alert you before your hearing is damaged. These are examples of very good performance that is being rewarded by management. At Hammerfest, during the turnaround of the plant last summer, several energy efficiency measures were implemented.
We managed to reduce the power consumptions by 20 megawatt-hours, saving Equinor NOK 50 million annually, and we have also reduced flaring, saving gas for future export. In total, we achieved 120,000 tons reduction of the annual CO2 emissions, and we see further potential for improvements. Another example close to my heart is Norne, also at the NCS. Optimizing and improved cooperation between the reservoir and facility departments led to the shutdown of one water injection pump, resulting in a reduction of 26,000 tons of CO2 per year. We are also at the forefront of reducing methane emissions. In our Bakken asset in the U.S., we have reduced flaring through, among other things, building infrastructure to capture associated gas, resulting in over 620,000 tons of reduced CO2 emissions. It's tempting to only look at the large projects with the immediate impact. But in our world, every kilogram counts.
Our results so far are the sum of many smaller energy efficiency projects. It is a matter of culture, awareness, and priority. We think it's so important to engage our employees on climate matters. On the NCS, we have a network of energy coordinators collaborating closely with our operational engineers, systematically identifying big and small improvements in energy efficiency and CO2 reductions. These are all put into a funnel where the ideas with the highest impact meet, they meet the investment hurdles, and those that have an immediate value will be prioritized. Since 2008, we have implemented 300 of these projects, contributing to total CO2 reductions of more than 1.4 million tons of CO2. That's the equivalent of removing 700,000 cars from the roads. This has accelerated our engagement and focus on the organization, the organization is eager to do more.
Bear in mind, almost all of these projects are NPV positive with a payback time of three to four years. Some of our U.S. projects have a payback time of one to two years. Climate considerations are integrated in our vision, strategy, and performance management. Both our corporate executive committee and our board of directors frequently discuss the business risks and opportunities associated with climate change, including regulatory, market, technological, and physical risk factors. We stress test our portfolio against IEA's World Energy Outlook scenarios on an annual basis. The analysis cover all accessed acreage from exploration licenses to fields in production over the lifetime of the assets. The latest stress test we conducted demonstrated that the main driver for differences were assumptions around oil and gas prices in the different IEA scenarios.
Two-thirds of our portfolio is already subject to CO₂ tax, we use a carbon tax of NOK 50 for all investment decisions, whether they are subject to CO₂ taxes or not. The test shows that we have a robust portfolio, even in a low-carbon future and in a two-degree scenario. We also have significant flexibility in our future portfolio. With 60% of the forecasted CapEx in 2025 related to projects that are yet to be sanctioned. There is a substantial potential for continued investments in high-value, low-carbon oil and gas projects and renewable energy. Statoil openly reports on sustainability priorities and performance. Our products include the annual Report 20F, which includes payments to governments, our sustainability report, which is externally verified, the energy perspective scenario, and the climate roadmap.
We support the Task Force on Climate-related Financial Disclosures, we joined a preparer forum for oil and gas companies in 2017, focusing on how to present forward-looking information of high uncertainty. We will continue to engage with stakeholders on our reporting and be in the forefront on transparency in line with our value of being open. In Statoil, we believe the winners in the energy transition will be the producers that can deliver low cost and low carbon emissions. Our own preparedness is important, we also see that we are being recognized by external parties. We are a constituent of the FTSE4Good Index, last year, we achieved a score of 89 on the Carbon Disclosure Project's report on climate change. We are ranked number one on climate risk preparedness in the Investor Climate Compass. Let me briefly comment on our 2018 guidance.
We are free cash flow positive below $50 per barrel, have a cumulative free cash flow of $12 billion, and a return on average capital employed at 10% this year, growing to 12% in 2020 at $70 per barrel. We are doing all these things within our financial guidance, and the financial guidance is unchanged. Let me sum up on behalf of us all. Safety is and will always be our priority 1. The improvements we have seen in our safety results serve as an inspiration to continue the relentless efforts on improving our safety performance every day. Safety is consistent with focus on efficiency. So is low cost and low carbon. Always safe, high value, and low carbon mutually support each other, and this makes sound commercial sense. With that, I hand the word over to Peter, and thank you for the attention.
Thank you, Hans Jakob. Spot on time. Thank you, everybody. I'd just like to say that we're absolutely on schedule, so my thanks to all the speakers. While we just do a little bit of quick housekeeping here, and get a couple of podiums on, when they're on, I'll ask the speakers to come back on stage. While we're doing that one, let me just take an opportunity to run through how we plan to do the Q&A. There'll be a couple of roving mics in the audience. If you've got a question, just let me know, and we'll try to get round to everybody in here and also on the phones if we're able to. Apologies in that I don't yet know everybody by first names in the way I do to some of our equity only people. There are some journalists here as well.
If I point rather than introduce you personally, my apologies, and we'll get to know you afterwards. What we want to do is to be open and engaged and give everybody an opportunity to ask questions. We can do that much more effectively if we can keep those questions fairly short and sweet and to the point, and ideally on one subject. If we get an opportunity at the end to follow up, we will take that opportunity. There'll also be chances afterwards in the room outside. With that, if I can ask all the speakers to come back up. We've got the first mics, and I'll open up for the first questions, and we will take it from there. I saw the first hand go up at the back, and then it will be Maria, and then Ana.
Thank you very much. Ron Bousso from Reuters. Hi, everyone. I have two questions. First of all, about your targets for the carbon intensity. I understand that they only include essentially Scope 1 and 2. What are Statoil's ambitions or goals or targets for including the Scope 3 aspect of your emissions? On the reserves, I'm very curious to know how much of your current reserves are heavy oil, and other barrels that you think you won't be able to use in your current scenarios. Thanks.
Our main focus is on our own operations adhering to the emitters pay principles, which is also clearly stated in the Paris Agreement. That is the starting point, what we can influence directly through our operations and our own activities. We also engage with Scope 2 and 3. When it comes to the supply chain, we had examples here how we approach the supply chain with requirements, how we would like our supplies to look like, also when it comes to carbon footprint. Increasingly, we will do so. On the usage of our products, we focus on that a lot, but we also look into what is the most impactful ways we can influence that. First of all, we need alternative to oil and gas.
That's why we engage in renewable energy because that is really what can eventually replace oil and gas in the energy mix. Alternatives that compete also from a cost efficiency perspective. That is one of our focus areas. Decarbonizing is one of them. CCS is therefore high on our agenda. It's also an agenda that we share with the OGCI, where carbon capture and storage represents approximately 50% of our efforts when it comes to investments from the fund. Hydrogen is also a dimension that is a little bit further down the road, but which we see as a really interesting part of the decarbonization mainly from natural gas. These are the ways that we engage into that part of the value chain.
We take sort of the whole perspective, but our main focus is still consistent with the emitters pay and we will fix sort of our own operations in the first hand. Your second question, just remind me.
Heavy oil and reserves.
We say that we are not exploring for heavy oil. We do have heavy oil in our portfolio, and we continue to take responsibility for what we have in our portfolio. Through exploration, we might also find heavy oil in our portfolio. We will have to consider how we deal with that. When consciously looking for resources into our portfolio, we don't explore for it, and we will not inorganically look for it or access these kind of resources like for instance, oil sand. We made a conscious choice to leave oil sands because that is really not the resource where we had the skills and the competence to be the best to take out carbon from that business.
We do as much as we can to decarbonize or reduce the carbon footprint from heavy oil resources that we have in our portfolio, which is basically the Peregrino operation in Brazil, the Mariner field in Scotland. These are sort of the main heavy components in our portfolio, and we do a lot of activities to reduce the footprint, both in Brazil on the Peregrino, and at the Mariner. In terms of reserves and percentages, I haven't got that for you here right now.
Okay. Can we take the next question from Maria? The lady here. Thank you.
Hi. Maria Drew with T. Rowe Price. I had a question on the next generation oil and gas portfolio, the one you said that's three kilograms per BOE. Can you just talk about the oil and gas split of that portfolio and how different it is from the current mix? Then also what is the IRR that you would project with that portfolio? You talked about new energies being 9%-11%. What do you expect for the oil and gas side, and how do you kind of balance those two as you try and make investment decisions going forward?
I think I'll leave that to Hans Jakob.
Thank you for the question. The oil and gas split is 65, 35, and the IRR is twice the level of the renewables plus. It's very profitable. It has an average break-even of 21 and IRR about 20. It's a highly attractive portfolio. That's why we call it the best opportunity set that we have seen.
30% IRR at $70 per barrel.
Yes.
That's as a reference.
Yeah. At 70. Okay. Next question can we take from Ana? Ana here
Ann-Iren Gabrielsen from DNB. First I must say the new portfolio is really impressive and so is your overall achievement compared to peers. What strikes me is that it's a pretty long time since Sleipner CCS, and of course you say that CCS is key for Sleipner and Snorre. I know you're also talking about pilots when it comes to CO2 injection in the U.S. CCS in general is pretty expensive, but of course there's been a broad-based cost reductions all over the place. Where are we? How much will we eventually need to see a step change, so that, for example, CCS can be implemented on a much broader scale in Norway and not only pilot, but permanent in the U.S.?
I'm sure Irene would love to comment on this. I'll just give a few reflections. Of course, when it comes to Sleipner, yes, it is some time back. Gina Krog will actually also be tied to that injection system. There will be new capacity coming in. I think when it comes to CCS, my perspective is that there's no silver bullet on climate change. Irene pointed to how much of our energy system there actually is only. It's so hard to decarbonize and you're basically left with CCS. The IEA tells us that 14% of the reductions in CO2 emissions towards the well below two degree target has to come from CCS. If you talk about well below, you are actually at 30%. Increasingly we depend on CCS to make this work. The cost has to come down. We need a commercial model.
We need basically a cost on carbon emissions to make it work. Now, Irene, you might want to
I think it's a very fair reflection that it hasn't really happened at the speed that the world needs to see it happening. The major reason is because there's no income stream in CCS. There's basically only cost. The way we think about it now is more on CCUS. Is there a way to actually utilize the CO2 and get some income from the CO2? It's not obvious, but these are things we are pursuing through the IOGP cooperation. I talked about this potential hydrogen plant in the Netherlands, and we see that we can probably produce power from that at similar levels to where offshore wind subsidies were three, four, five years ago. That's really what has driven down cost on solar and wind. It's been public-private cooperation, deploying and the technology.
Every time you build a new project, you learn something, you implement that in the next project. I think what we need is deployment. It needs to take the form of public-private cooperation as it is today. That's why we're excited that the Norwegian government is leaning forward, seemingly willing to pursue this full-scale CCS project in Norway.
40 million tons being stored today is far too little. Only one project since 2014. We need the Norwegian project as a demonstration. We simply need projects and scale to take cost down, and we have seen it, as you say before. I think CCUS is important, it doesn't crack the code.
No.
It's part of it. I think the illustration of what we are trying to do in Bakken is a very good one. Actually, instead of water, use CO2 to frack.
Yes.
It stays there. At least a big part of it stays there. We haven't got all the solutions, but it's one of these type of part of the puzzle that I think we need to work on.
We pursued CO2 or IOR with CO2 on the Norwegian Continental Shelf several times, but they always failed because we didn't have CO2 available, because there wasn't one single source of CO2. Potentially with this new project in Norway, we will have enough CO2 in one place that we could potentially use this IOR on the Norwegian Continental Shelf as well.
Okay, got a couple of questions from this side of the room. I'll ask the gentleman here first.
Yeah. Chris Hobson from Recharge. Could I ask Irene, you mentioned a figure there of NOK 100 billion on new energies by 2030. Could I ask you to perhaps quantify that a bit between fixed versus floating? You mentioned Dogger Bank. Is that going to be a priority? What proportion also will the spend be on solar, which you talked about at the end? Could you just give us a little bit of a split down from a technology point of view?
I think it's almost impossible to give that kind of split. We're talking about 2030 here. The primary focus has been on offshore wind as I hope I shared with you in the presentation. We see growing potential for floating, we expect about 13 gigawatts of offshore floating wind to be installed by 2030. Not Statoil, but on a global basis, we hope to take a fair share of that. Then solar. We're carefully testing it to see if we can really add competence and capability to that space. So far, we see a lot of opportunities to apply our engineers and make sure these projects are developed in a safe and efficient way. We have not decided to go all in on solar yet.
Okay.
Those NOK 100 billion could also be spent on carbon capture and storage projects. We haven't been specific on that. It is an expectation, given that we can compete for the best projects out there.
Okay. Thank you. Especially-
I just, one comment. I often get this question, how do you allocate your money? Basically, this is the direction, this is what we will try to do, we don't allocate money because then, I would like projects to compete, to come out with the best propositions where the risks reward, and you need to relate rewards to the risk of the individual projects. Then in the end, it's hard work, we will hopefully get to NOK 100 billion, it's really the quality of the project that will define that.
Okay. Thank you. Thina?
My name is Thina Saltvedt from Nordea. First of all, thank you very much for an interesting and important report, and not at least for being so open and transparent about this important work. I hope this will set a standard. I do have a question, first of all about the stress testing. You said you're stress testing from the IEA scenarios, and then the carbon price. I was wondering if you also stress test your portfolio, using different scenarios. For example, seeing growing skepticism about investments, for example, in shale production and in Arctic areas. Do you stress test the portfolio against these kind of risks? I'm just curious about how, for example, when you're moving into Brazil, how do other corporate, or for example, companies you work with, or of governments, receive this message you're coming with now?
Thank you.
Bjørnar Otto, I think you'll excel.
Thank you for the question, Thina. On the stress testing, we have been working with that for over the last three years and developed some kind of experience on how to best do that to really see to what extent the value at risk, or value of Statoil at risk, if we were to enter a two degrees future. Here we follow pretty much the guidance that has now been put out by the task force. We have decided to, in the simplest way, the testing we're doing is actually replacing our own planning assumptions with that of the price expectation from the IEA, the various scenarios for gas outlooks, oil outlooks, and also the expectations when it comes to CO2 price. What we have seen is that the resilience of Statoil is very good in all those scenarios.
Actually, you showed this year it was down 30% in a very aggressive two degrees.
One thing.
Yeah.
Yeah.
Last year, actually, the value was 6% higher than when we used our own planning assumptions. It varies over time. We use that scenario testing also because our shareholders asked us to use a standardized format. The IEA if over time they evolves, we should use other established scenarios, we're happy to do that. In general, to the second part of the question on collaboration and how are we standing out, I think most energy companies are actually on a journey. We are not alone. Maybe, but I think it's fair to say that we get inspiration from others, and maybe others get some inspiration from us. It's quite a fast-moving field. I think that's very interesting time actually to see how quickly the companies are moving ahead, but not everybody is moving in as fast as everyone, and also slightly taking different choices.
On Brazil, if I may. The last company to join the OGCI, that was actually Petrobras. Brazil is also on a journey. Pemex is part of the same initiative now. We see that in our dialogues with Petrobras and in Brazil and in the oil and gas industry that is more receptive to these kind of measures, the importance of carbon efficiency. We work on that on the Peregrino field, which is a heavy oil field. How can we reduce the footprint? Because impact can be pretty significant, and that's what we're looking for. The Roncador field, which we bought into now 25% being operated by Petrobras, our intention is to have an impact on those 25%. Climate and energy efficiency is definitely one of the components that where we will try to impact. This is how we work also in the context like Brazil.
Irene?
No, I just wanted to add to that because we were recently in Argentina with the Norwegian trade delegation and had lots of meetings with the national oil and gas company in Argentina, YPF, and I shared some of our slides and the climate roadmap, and they show theirs, and it was amazing how similar Two companies on the upside world are actually thinking about this agenda, and I think it strengthens our case. We have been a role model for a lot of these NOCs through the oil and gas business, but I think we're also becoming a role model more as a broad company. We have a lot of incoming calls from India, from Argentina, from Malaysia, even Indonesia, these NOCs wanting to learn more about offshore wind and so on. I think it's good news.
Gerald?
On the NCS, we have a very constructive climate in the licenses for decision-making that contributes to the lowering of the emissions. For instance, in the Oseberg license, where we cut the CO2 emissions by 50% to applying new technology, very supportive partners. I think the most curiosity is when we introduce the concept of roadmaps and the long-term thinking or continuously improving the fields over the lifetime, because that's a long horizon. In Brazil, with Petrobras, we are the two biggest subsea operators of the number of subsea wells in the world. We also share a long-term relationship on technology development and exchanging experiences.
Just another question here at the front, and then we've got two.
Hi. Thank you. My name is Valeria Piani for UBS Asset Management. I have two questions. One related to the scenario testing. As you have been testing your portfolio against the IEA scenario, can we assume that your targets are science-based? The second question is more on the incentives plan that you mentioned that is integrated and is considering climate change. I was curious to understand if it's related to short-term or long-term incentives, and it's something that you also have across the workforce, or if it's only for your board members and executive positions.
Thank you.
I'm not sure I picked up the first question on the scenario.
Could you need to ask about whether we set a target on that?
science-based target.
Oh, okay. I can talk to that. Okay. This goes slightly back to this called 3D life cycle perspective. We have now shared with you today how we focus to address our own emission, being a very responsible user and consumer of energy, and then also Eldar mentioned the overall life cycle. We have been discussing very closely with the CDP and other, We Mean Business and others on the science-based targets. We are curious about that. For now, we have actually been quite clear that we told them, your methodology doesn't fit with companies that help provide energy for others. We're supposed to be held accountable for actually taking reductions of all the use of the energy that all of us are using when you travel or by car or by plane or what have you.
This is a kind of bit of a challenge with the emitter pay principle. We would like to continue to have a dialogue with them, but as of for now, we don't see us, like any other energy companies moving into using science-based targets.
Remuneration. I would guess, based on all KPIs has a component of both short-term and long-term. When it comes to my KP, I have six in my contract that actually goes into the variable pay. Value creation returns is part of it. Carbon intensity is one. In this last year, we reduced that by 10% from 10 to nine. I think the way we think is kind of this roadmap. While the next target is eight kilos per barrel. Basically, we look at longevity, but specifically what I'm measured against is the current achievement, but that is tied to a longer-term target, longer-term roadmap. On safety, for instance, my KPIs is related to the serious incidence frequency, and we have also long-term ambitions on those. Specifically, it's the short-term achievement that we can document that goes into the reward.
All these have long-term ambitions attached to them.
Okay. This gentleman at the front.
Lower in the organization.
Good morning. It's Rafal Guizad from Bank of America Merrill Lynch. Just coming back to your target on next generation portfolio being CO2 intensity of three kilograms per barrel. I was curious to hear how much of that is captured by Johan Sverdrup being powered from shore, given that I think the number on that is about half a kilogram per barrel. I wondered, as we get past first oil on Johan Sverdrup in Q4 next year, what might happen to that number ex-Johan Sverdrup? Thank you.
I think the short answer to that is that we haven't disclosed anything beyond saying that it's close to zero on Johan Sverdrup. On the overall on that portfolio, there are some above and some below, obviously the 3, and even the 8 target, but on a portfolio level, that comes out very strongly with the 3 kilos. The important part is that we try to optimize the project on the decision point, on the sanctioning of the project. We also include future activities to improve further. Technology, operational philosophy based on the performance from the wells. We have a lifelong perspective on reducing these emissions and develop even better solutions. One practical example, 79% of all emissions on the NCS is related to turbines. We have a huge incentive to drive technology development together with the suppliers to improve the CO2 footprint from the turbines.
That's why we had this huge saving on Melkøya and Hammerfest when we actually closed down one of the turbines, the so-called fifth turbine, and saved 120,000 barrels. Going forward, we will work in collaboration, even stronger, with the suppliers to put on new measures that could improve this even further. Lady at the front. Thank you.
Hello. Catherine from Invesco. I had two questions. One on decommissioning, in that long-term scenario planning and so on, how have you, I guess, thought about the climate, but also wider environmental considerations for decommissioning? My second question was around technology, and I think on your website, you talk about Roberta, and how that's a pretty, I don't know, a powerful tool, and I wonder to what extent your health and safety and CO2 emission reduction, but also other efficiencies have come from that, and what we could expect in future.
On decommissioning, that is one of the really high-focused areas in our R&D portfolio. This is really about simply new technologies that in a much easier way, instead of removing everything, is there other ways of actually plugging the wells, for instance, that has a much lower energy and carbon footprint, the whole new toolbox. We see some pretty amazing results and also have even higher ambitions on how to do that before this will impact us at the larger scale. On Roberta which I haven't heard about. It's a bot.
It's Roberta.
It's one of my favorites. Oh, it was that one. Okay. I've heard about it.
You know this Roberta.
They are related, Rob and Roberta, but they're not officially in a relationship.
On paper.
On paper. They do manual tasks, including reporting of statistics to Statistics Central Bureau in Norway. They do a lot of manual tasks, and they are speeding up the processes. They do less mistakes, and it's part of the automation that goes on. We are also a digital front-runner, not only on lowering the carbon, but also increasing the efficiency. How and where can we apply this to even have a lower carbon footprint? That is why we have disclosed this as a futuristic also part of the toolbox. I think your point is excellent. It was a very important question to raise, though, because probably digitalization is going to radically change how all of us consume energy, including Statoil. It will allow us to put sensors around, and it allow us to do a kind of optimizing our operations in an unprecedented way.
We're starting to see that in our sailing patterns with ships, optimizing that, cutting emissions, and you're going to see, you mentioned the Sverdrup field. We'll put thousands of sensors into that, allowing us to optimize every part of that operation. For sure, digitalization is a very important part of the decarbonization journey. Could I just say on decommissioning, because fortunately, we haven't been so experienced. We've been able to extend the lifetime of our fields, but of course, decommissioning will come with a lot of sustainability challenges. It will be run in a close dialogue with government and authorities and done within very strict regulations and procedures. Irene, and then I think we're
I just wanted to pick up on what I think your question was because there is a clear connection between safety and digitalization. One example from last year, we actually won the U.K. renewable award for it. We did drone inspections of our wind farms rather than having manual inspections. Normally you'd have people out there in climbing gear, slowly making their way down the blades. This time we used drones, and we did the same exercise in hours rather than days. It's much more efficient and definitely much safer. I think there's lots of untapped potential within digitalization and also to improve safety.
I have a growing interest for unconventionals, and in the U.S., we have applied a lot of sensors. We capture the data, we do less driving, that is more safe, but it is also reducing the emissions. We will try to speed up this going forward.
I think we have covered everybody, unless there is any that I missed. There is also an opportunity afterwards to ask any questions one-on-one. With that, my side is done. I will just ask Eldar Sætre to round off for the day.
Okay. Thank you very much for coming. I will not try to summarize all the things that we have touched about, but except for one or two things, actually. I think the starting point for us is to be an integrated part, to understand what is going on in society and bring that on board and engage.
Not only look at sustainability from distance, but actually integrate it fully, totally into the strategy, into our business decision-making, into the governance system. That is the only way we can embed it in our DNA and behave accordingly. It is gone. Always safe, high value, low carbon. You think about that as three separate things. In my mind, it does not work like that. To me, this is totally integrated. I started in my introduction to explain how safety and value and cost is actually attached to each other. I hope we have been able to show how low carbon and sustainability is also actually attached to high value. Value is not only about the short term, it is really also about the long term.
To me, this is a totality, and we have to integrate these perspectives into how we run our business. I leave it to that. Thank you very much for coming. Thank you for all the engagement and the questions. To have dialogues as this with you, obviously also many other stakeholders, is really the only way we can move this forward. It is really important for us to have this type of event. As I said, I can assure you we will repeat this next year as well. Thank you very much for coming, and take care, and go back to your offices in a safe manner.
Sustainable.
Sustainable manner as well. Sorry. Thank you, Irene. Thank you very much. Okay. Thank you. Take care.