Ladies and gentlemen, we are very pleased to welcome you to Equinor's fourth quarter 2019 and Capital Markets Update. We really appreciate you coming along to join us today. It's always good to engage with our analysts, investors, and stakeholders. Very, very welcome here this morning. We will start with a short introductory video, and then go straight into presentations from Eldar Sætre, our Chief Executive Officer, Pål Eitrheim, who is the EVP of the renewables business, and last, Lars Christian Bacher, who is the CFO. We'll open up for questions both from the floor and also from those who are dialing in this morning. Safety first. What I would like to do is just give a very short statement relating to safety. If the building needs to be evacuated, the fire alarm will sound.
On hearing the alarm, security and support staff will be on hand to direct you to the nearest emergency exit and assembly point. This assembly point is Copthall Close, which is next to Apex London Wall Hotel, just across the street from this venue. I think I'm right in saying that there are no planned emergencies, but if there is one, there will be plenty of staff around to help you to move to the right place. With that, thanks again, and we will start the video. Thank you.
The world is changing at a great pace. Still the world needs energy, lots of it, and more. At the same time, emissions must come down and it must happen fast. Equinor is developing as a broad energy company to be competitive in a low carbon future. That's why we take pride in opening a world-class field like Johan Sverdrup. That's why we are ready to invest in huge offshore wind projects like Empire Wind and Dogger Bank. That's why we are developing solutions to capture CO2 and produce emissions-free hydrogen. New technologies and digital solutions play instrumental roles in all of them. Now, we are stepping up our climate response with higher ambitions in Norway and across the world. To realize all of this, we are working together with our partners, suppliers, and the societies we are a part of.
Together, we can achieve so much more than alone. Tomorrow will look different than today, the transition also holds opportunities. We are well-placed to act on this and continue to turn natural resources into energy for people and progress for society.
Thank you, Peter, and good morning to you all. We are living in times of change, as the short film showed us, and the outbreak of the coronavirus is another strong reminder that as a society, we are facing many, many challenges. As always, it is a great pleasure to welcome you all to our regular capital markets day here in London. I must admit that even more than usual, we have looked forward to this year's edition. 2020 is set to be a very good year and also the start of a strong decade for Equinor. Today, we will show you that we are well-positioned to grow production, cash flow, and returns above and beyond what I believe most companies in this industry can deliver. In addition, the start of a new decade is an opportunity to take a really long-term perspective.
We will show you how we are underpinning a competitive and resilient business model fit for long-term value creation and in line with the Paris Agreement. Finally, we do this with a consistent and clear commitment to capital distribution. We have a strong balance sheet and expected growth in long-term underlying earnings allows us to increase the quarterly cash dividend and announce the second tranche of our share buyback program. Lars Christian will soon go through our results in more detail. As CEO, I am privileged to go through a few of the main deliveries in 2019. The short version is this: we are doing what we said. Delivering on our strategy, always safe, high value, low carbon. Always safe remains our top priority. Our number of personal injuries is noticeably down.
When it comes to the serious incident frequency, we were not able to continue the positive development from 2018. We will always strive to improve on safety, always, and are therefore reinforcing our efforts through consistent leadership. An even more systematic and rigorous approach across the whole company. In 2019, we delivered high value with $13.5 billion in cash flow from our operations after tax, including accelerated tax payments in Norway of more than $700 million. This has been combined with an increase in total capital distribution of more than 40%, reflecting a 13% step up in the cash dividend, the conclusion of the scrip program last year as planned, as well as the introduction of our share buyback program. New projects coming on stream last year represent 1.2 billion equity barrels to Equinor at an average break-even oil price of around $30 per barrel.
Our deliveries were also strong when it comes to low carbon. Average CO2 emissions from our production last year were 9.5 kilos per barrel, around half the global industry average. Our methane emissions was 0.03%, approximately 1/10 of the global industry average. These achievements are very important to us because a core element of the Paris Agreement is that everyone needs to reduce their own emissions. Finally, last year, we made the investment decision for Hywind Tampen at the Norwegian continental shelf, and we won the opportunities to develop Empire Wind offshore New York and Dogger Bank in the U.K., the world's largest offshore wind project ever. Renewables projects in development in 2019 will add 2.8 gigawatts of electricity generation capacity to Equinor, underlining that 2019 was truly a game-changing year also for our renewables business.
Over the last few years, we have strengthened our competitiveness and radically improved our project portfolio. Driven by this, driven by the strong opportunity set of high-quality projects in front of us, we expect to invest on average $10 billion-$11 billion in 2020 and 2021, and around $12 billion in each of the two following years. We are in a strong position to deliver profitable growth, starting with an around 7% increase in oil and gas production in 2020. Even more importantly, we are also set to grow cash flow and returns significantly in the years to come. At an assumed oil price of $65 per barrel, we expect to increase our return on average capital employed from 9% last year to around 15% in 2023. 15%.
We expect to deliver organic cash flow at record levels of around $30 billion in total after tax and organic investments from 2020 - 2023, $30 billion. Johan Sverdrup Phase 1 was sanctioned in 2015. Together with our partners and more than 500 suppliers and sub-suppliers, I believe we have raised the bar for execution excellence in this industry. We started production in October last year, ahead of schedule and 30% below the original cost estimate at the time of the FID. We are now producing more than 350,000 barrels per day from eight wells, on track to reach plateau of 440,000 barrels per day during summer. The entire Phase 1 investments are expected to be paid back even before the end of this year, fewer than 15 months after the first well was put in production.
Ladies and gentlemen, Johan Sverdrup has so far been visible in the CapEx numbers, but from now on, you will see it even stronger, impacting our production, our revenues, and our cash flows. Johan Sverdrup Phase 1 is now a producing field, but we still have a highly competitive portfolio of new oil and gas projects coming on stream towards 2026. This portfolio can deliver 6 billion barrels to Equinor at least, with a 60% liquid share and an average break-even oil price below $35 per barrel. It also supports an annual average production growth of around 3% from 2019 - 2026. Approximately 50% of this portfolio is located outside the Norwegian Continental Shelf. As we are increasingly developing as an operator internationally, this gives us even better opportunities to leverage our industrial strengths from the Norwegian Continental Shelf, like operational excellence, world-class recovery, and project execution.
This deep industrial competence is now being incorporated into high-quality projects like Bay du Nord in Canada, Rosebank in the U.K., and BM-C-33 and Bacalhau in Brazil, contributing to a profitable expected annual growth of more than 3% internationally. When the last of these new projects, all of these new projects on the Norwegian Continental Shelf and internationally, comes on stream in 2026, the entire portfolio will already have been paid back. That is what I call a truly world-class project portfolio. Equinor was built on the Norwegian Continental Shelf. This is our heritage and also a very important part of our future. In fact, the NCS never seems to stop surprising us positively. Here we are already delivering impressive recovery factors second to none, and last year we even raised the ambition, aiming to add 3 billion barrels to our resources compared to previous plans.
During 2019, we have mapped 550 million of these new barrels of oil equivalents, which is equal to half a Johan Sverdrup Field Equinor share. These are highly valuable barrels as well, with an average break-even oil price of around $25 per barrel. We are also working to turn the gradual maturation of the Norwegian Continental Shelf into an opportunity for more significant further value creation. New ways of working and also a new dedicated operational unit are enabling us to reduce costs by around 25%, offering a break-even oil price on field extensions compared to current plans of $35 per barrel. This gives you an even longer life to old giants like the Statfjord field. When I started back in 1980 in Equinor, my first job was actually to do the accounting for the revenue stream from the Statfjord field.
Ladies and gentlemen, we are still counting. Together with our partners on Statfjord, we now have plans to extend production towards 2040 and to increase the value creation even further. To me, this is really a good reason to love this industry. There is always more values to be created, which also includes exploration from well-proven hydrocarbon systems. Last year, we added 120 million barrels at the Norwegian Continental Shelf from exploration, creating a net present value of around $500 million. We also have an exciting exploration program for 2020, both in Norway and internationally, and Lars Christian and Tim will talk more about this later today. Let me turn to the even longer-term perspectives. We know that the world needs to reach net-zero emissions, and at the same time, we must provide enough energy to meet the growing demand.
The Paris Agreement and the UN Sustainable Development Goals set a clear direction. The single most important question facing any leader in our industry today is this one: How do you remain relevant and competitive, and how do we turn challenges into business opportunities and value creation in a low-carbon future? How do we do that? Equinor is well-positioned for the energy transition, and today we are taking additional steps by launching what we call a new climate roadmap.
We aim to strengthen our industry-leading position within carbon-efficient operations, to grow profitably from a strong and competitive position within renewables, and to reduce the net carbon intensity from initial production to final consumption of the energy we produce by at least 50% by 2050. We are doing this to drive change towards a low carbon future in line with the Paris Agreement, and we are doing it with a clear commitment to value creation and to strengthen our competitiveness and resilience in the energy transition. Today, we are setting a new ambition to reach carbon neutral global operations by 2030. Our main priority will be to reduce greenhouse gas emissions from our own operations in Norway and internationally, but we will also use quota trading systems and high-quality offset mechanisms.
In January, we launched an unprecedented set of ambitions for our operations in Norway to substantially reduce absolute greenhouse gas emissions, aiming towards near zero in 2050. By 2030, we aim to cut 5 million tons annually, reducing our greenhouse gas emissions by 40%. This can be done in a profitable way, increasing the value of our NCS portfolio. Framework conditions, climate policies, and also the availability of renewable electricity in Norway are supporting emissions reductions in a unique way. We will work just as hard to cut emissions internationally, and we are now aiming to reduce the average CO2 emissions from our global operations to below 8 kilos per barrel by 2025, five years earlier than the previous ambition. Based on the new opportunities that we won last year, we are now scaling up our renewables business faster than previously anticipated.
Renewables are now likely to reach 15%-20% of our CapEx spend in two to three years, and we will move from now on also guide on production and returns in a more similar way as we do for oil and gas. In 2026, we expect the production capacity from our renewables portfolio to be 4-6 GW Equinor share, mainly based on our current project portfolio. This implies an annual growth rate of more than 30% from current levels. Towards 2035, we expect to increase our capacity further to a range of 12-16 GW, depending on the availability of attractive project opportunities. Scale is important to define competitiveness within renewables, and with a tenfold increase already by 2026, we are quickly turning scale into a competitive advantage.
We will continue to utilize our deep oil and gas experience and based on well-proven project development capabilities, operational excellence, as well as a strong trading platform, we expect to achieve unleveraged real project returns of 6%-10%. Through portfolio optimization as well as efficient use of project financing, we can achieve significantly higher returns on our equity investments. Renewables are not replacing or displacing competitive oil and gas projects. It has opened a new set of opportunities to create value while also diversifying our portfolio and making it more resilient over time. Soon you will hear Pål talk more about this in his presentation. It is a good, sound business strategy for us to ensure competitiveness and resilience in a low-carbon future. Therefore, we are today setting new ambitions for the longer term.
Towards 2050, we aim to reduce the net carbon intensity, including Scope 3 of the energy we produce, by at least 50%. By this, we are not taking on the responsibility of others or undermining the emitter pays principle. In fact, we are doing this to strengthen our competitiveness and secure attractive business opportunities. We have several levers and significant optionality to reduce the net carbon intensity, operational efficiency, the oil and gas split combination and scale. Renewables growth, as well as CCUS and hydrogen, are expected to be the main contributors. We also have the opportunity to use recognized offsets and natural sinks to reach the ambition. We have tested several scenarios using different levers and price margin assumptions and see that we are in a strong position to maintain competitive value creation and a strong cash generation capacity consistently during this transition.
We know that in order to reach the goals of the Paris Agreement, there will have to be significant changes in the energy markets, which means that also our portfolio will have to change accordingly to remain competitive. We will produce less oil in a low-carbon future, but value creation will still be high. Oil and gas production with low greenhouse gas emissions will be an even stronger competitive advantage for us. In addition, profitable growth in renewables gives significant new opportunities to create attractive returns. CCUS, CCS, and hydrogen will also be important to reach the climate ambitions globally, and these opportunities are playing directly at our core competence and strength. Irene and Al will talk more about these topics in one of the breakout sessions. Feel welcome.
We are now looking 30 years into the future, It is not possible to predict the exact shape and pace of this transition, not for society and not for us. We are setting a clear ambition to change in line with society and in line with the goals from Paris. We will do this with a clear commitment to profitability and value creation for shareholders. Our commitment to value creation is also a strong commitment to capital distribution. As stated in our dividend policy, it is our ambition to grow the annual cash dividend in line with the long-term underlying earnings. On this basis, the board proposes a 4% increase in the quarterly cash dividend to $0.27 per share.
This comes on top of last year's step-up with an increase of 13%, and we are on track to deliver on our $5 billion share buyback program. Based on an even distribution for the rest of this program, we are announcing now a second tranche of around $675 million, including the Norwegian state's share. The share buyback program is subject to annual reviews and renewals at our AGMs and runs until the end of 2022. Let me conclude by summing up what I believe is the strong value proposition. First of all, we are growing production, cash flow, and returns from a material and world-class project portfolio. Secondly, we are taking actions to shape our portfolio in line with the Paris Agreement while strengthening our competitiveness and creating significant value for our shareholders. Finally, we are committed to continue delivering competitive capital distribution.
With that, I thank you very much for your attention and leave the floor to Pål. There you are. Thank you.
Thank you, Eldar. Good morning. This is a very special day. It is actually the first time that we present the renewables business at CMU. Of course, it is a great pleasure for me, but even more importantly, I think it is a strong signal about the strategic importance and the potential of this business for Equinor. It's an opportunity for me to provide more detail on the renewables business and also talk about why we see this as an area of competitive advantage. 2019 was very much of a game changer for Equinor's renewable business. We won offtake contracts for Dogger Bank and Empire Wind. We sanctioned Hywind Tampen on the Norwegian continental shelf. We increased our shareholding in Scatec Solar. We farmed down half of our share in Arkona for EUR 500 million.
We have 50 years of oil and gas experience and a decade in offshore wind. For us, offshore wind is very much an extension, not a step out from our traditional business. We have world-class technical expertise. We are financially robust, and we are competitive on cost, and we now have the scale and the capabilities necessary to create value. A few comments on our producing portfolio. Equinor's strategy starts with always safe, and safety is our number one priority. In renewables, we had no serious incidents last year or so far this year. This, I think, illustrates the underlying quality of our people as well as our operations. Our producing assets in the U.K., in Germany, and in Brazil provide stable revenues. In 2018, our share of net profits from our three U.K. assets was around GBP 70 million.
Last year, our availability factor was 96%, and our production increased by an impressive 30%. Our contracts in this space typically start with a period of fixed prices, followed by years of market exposure. Since 2009, we have made gross investments of around $3 billion into our renewable portfolio. Last year alone, we invested $320 million, including the shares we acquired in Scatec Solar. I will come back to our ramp-up in investments shortly. But much more important than the investment level is the internal rate of return. The real IRR of our producing portfolio is above 10%. If we include the farm down in Arkona, the IRR increases to above 14%. This return is highly competitive. It's generated from a business with a very different risk profile than the rest of Equinor's portfolio. It deals with proven resources with no risk from exploration reservoir or decline rates.
It also has fixed prices and guaranteed revenues for our current portfolio. Last, Christian will come back to the risk/reward profile of the broader Equinor portfolio. By 2035, we aim to have 12- 16 gigawatts of renewable capacity installed. That is 30 x what we have today. Our strategic ambition is to become an offshore wind major. That is why I will spend most of my time today on that part of our strategy. Our strategy is very much value driven and plays to our strengths. We will leverage our offshore capabilities in markets we know, like Europe and the U.S., both areas geared for significant offshore wind growth. We will build offshore wind clusters to capture synergies and economies of scale. We will use our unique experience in floating offshore wind to capture opportunities.
For us, it is very much a question of when, not if, floating will be developed at scale. Oil and gas and offshore wind are branches of the same tree. The IEA estimates that some 40% of life cycle costs of an offshore wind project have significant synergies with offshore oil and gas. We are now capturing these synergies in the Dogger Bank project. For the offshore substations, we are using members of the HVDC team from the Johan Sverdrup project. Our experience from Johan Sverdrup has resulted in solutions that are more cost-efficient than comparable offshore wind substations. We are, in fact, applying the best of Equinor. Our muscle provides efficient and flexible support across a wide range of technical and commercial disciplines. Renewables require relentless focus on cost, and we will use what we can and adjust what we need in order to stay competitive.
We also have deep and long-standing relationships with the supplier industry, working across both branches, like in engineering, like in turbines, and in marine operations. Onshore renewables has seen the fastest growth in recent years. And in many markets, they are actually the cheapest source of electricity already. We will gradually develop profitable onshore positions in select power markets. Onshore currently represents around 5% of our installed renewables capacity, but we also recognize that this is a business that requires distinct capabilities and business models. And that is why we have partnered with a very proven solar developer like Scatec, and also why we acquired Danske Commodities. And together with Margareth's people, we are exploring more onshore opportunities in Brazil, where we also see potential synergies between the renewables portfolio and the natural gas business.
As Eldar said, we are set to significantly ramp up our renewables investments over the next four years. In 2020 and 2021, we expect annual gross CapEx in the range of $0.5 billion-$1 billion. In 2022 and 2023, gross CapEx will increase to between $2 billion and $3 billion per year. Most of that CapEx will go into offshore wind projects like Dogger Bank and like Empire Wind. Our portfolio now very much has the focus and the scale that we think is necessary to create value and stay competitive in this area. It fits with our strategy, it fits with our capability, and it also overlaps well with our existing geographical footprint. We have a good mix of revenue regimes between certificates, contracts for difference, and feed-in tariffs, and we have a high-quality project pipeline in different stages of maturity.
Dogger Bank in the U.K. and Empire Wind in the U.S. won offtake contracts last year and are now moving towards the final investment decision. We expect production from both by the end of 2024. Our share of that combined capacity is 2.6 gigawatts. We also have the floating Hywind Tampen project in execution already. We have secured acreage with a total capacity of around 6 gigawatts. That includes the uncontracted potential of Empire Wind in the U.S., our Massachusetts lease in the U.S., and our three Baltic projects in Poland. Strategically, these projects will work to diversify the Equinor portfolio. It will also make electricity an important revenue stream for the company going forward. We expect project returns between 6% and 10%, and these are real returns, not nominal, which would typically add 2 percentage points to the numbers.
This return range is competitive in the renewables industry, and we are getting there by pulling both technical and commercial levers. We see scale as an enabler for value, not as a goal in itself. In Dogger Bank, the combination of larger turbines, bundled project scopes, and volume discounts reduced costs significantly. We take a perfect project approach to improve our business cases. We benchmark our cost with standardized solutions, and we design to cost and revenue profiles. Recent auctions have shown that we are competitive on development cost. We're driving operational excellence to increase availability, capture synergies, and create value from digital solutions. Organizing in clusters is allowing us to serve multiple assets at a lower cost. Danske Commodities works closely together with our teams to improve margins and lower balancing cost.
We are now established in 39 countries. This deep trading expertise can also be applied in new markets. This is a capability that will be increasingly important with the introduction of more market risk. Portfolio optimization is an integrated part of our business model. We have noted significant and great market interest in renewable assets, particularly among financial investors. The Arkona sale generated cash and financial flexibility. It also demonstrated the value of high-quality offshore wind assets. Last but not least, project financing, as Eldar referenced, can provide access to capital at favorable terms. It can free up CapEx and increase our return on equity. We saw that with the refinancing of Dudgeon back in 2018, which released a significant payout and increased our equity returns by more than 25 percentage points. All of our near-term projects have contracts with price guarantees.
Reflecting the low risk, they also have returns in the lower end of the range. As we look to 2030 and beyond, we see an industry in significant transition. Technology developments will further reduce cost. We expect the gradual development towards more market-based prices. This is a transition that we are comfortable with, we are financially robust, and we are used to create value from price risk. For us, this combination of lower cost and higher market exposure presents opportunities to drive returns towards the higher end of the range. Offshore wind is set to grow significantly over the next three decades. In 2050, analysts forecast the global installed offshore wind capacity of between 600 and 800 gigawatts. Just for reference, what is installed today is around 30 gigawatts. Europe is very much the global hotspot for this development right now.
We expect both the North Sea and the Baltic Sea regions to develop around 60 gigawatts of offshore wind capacity by 2030, around 1/3 of that in the U.K. alone. We are prepared for new auctions and lease rounds. In the U.K., we also work on auctions to double capacity at our Sheringham Shoal and Dudgeon wind farms. The new backbone of our North Sea cluster will be Dogger Bank. At 3.6 gigawatts, it's the world's largest offshore wind development out there right now, and we own 50%. We see Dogger Bank as a strategic power hub, and the total potential in the broader Dogger Bank area can be multiplied by a factor of six. First, our final investment decision for the first Dogger Bank project is expected later this year.
When it's been fully developed with all three projects online in 2026, Dogger Bank will produce enough energy to power around 4.5 m illion U.K. homes. Our position in the Baltic Sea is an example of early access at scale and at low cost. Together with our partner, Polenergia, we hold positions in Bałtyk 1, 2, and 3, with 100% potential of around 3 gigawatts. An investment decision for the first project in Poland could come in 2022. Like Europe, the U.S. East Coast has high ambitions for offshore wind. The states in the regions have announced very ambitious targets and is backed up by firm auction pipelines for the years to come. This is another energy market we know very well.
We have operated in this region for more than 25 years. Recently, Danske Commodities moved in with us at our Stamford office in Connecticut. We have successfully established a strategic foothold in this region. So far, we have access to high-quality leases offshore New York and offshore Massachusetts with a combined potential of 4.5 gigawatts. A beauty with the U.S. system is that it offers high optionality that our projects can actually compete for offtake in different states. Empire Wind is our flagship project in the U.S. We are now setting out to develop the first 800 megawatts, which is around 40% of the total lease potential. We are positioning the remaining potential in the Empire Wind lease for future offtake auctions.
This is a project that is located in shallow water, close to shore, and this combination of its location and its excellent wind resource make it a very attractive piece of offshore real estate. For Empire, we have secured a competitive offtake contract in New York, and we are now scaling up the project team to mature this project towards an FID. One area where Equinor very much stand out is on floating offshore wind. We have more than a decade of operating experience from floating offshore wind, and up to 80% of the world's wind resources will likely require floating solutions to be commercialized. These wind resources are stronger and steadier, as we have experienced in the Hywind Scotland project. During its first two years of operation, it achieved an average capacity factor of 54%. That compares to an offshore wind average in the U.K. of around 40%.
A higher capacity factor means lower intermittency and higher value. We are uniquely positioned to play in this space. In 2022, we will have 118 MW of floating wind in operation, far more than any competitor. At what we're seeing today, 118 MW is around one third of the total global capacity at that point in time. To us, this is very much proven technology. Our floating lead is a gateway into Asia, and it's also a gateway into segments with potentially higher prices. Our main priority now, together with Anders and the TPD organization, is to continue attacking costs. Between Hywind Demo in 2009 and Hywind Scotland in 2017, we took down CapEx per MW by 70%, and the ambition for Hywind Tampen is to reduce further by more than 40%.
As for bottom fixed that we have seen, the key to further cost reductions is very much about scaling up. We are actively pursuing new opportunities in Europe, in the U.S., and in Asia to access larger projects that can make a material impact on cost. Our ambition is to bring floating towards commerciality by 2030. Take a look at this picture on Dogger Bank to the right. I don't know if you have been offshore in seas like this. I have, and I know that some of you are quite eager to go and see our offshore wind operations offshore. It may not look very rough, but I have some painful personal experience to share with you, and I'll give you the following advice. Don't have a big breakfast before you go. I will leave you with three key messages. First, we have a value-driven strategy leveraging Equinor's capabilities.
Second, we are creating value from a strong portfolio in productions with returns above 10%. Third, we will develop profitable growth from scale in regional clusters. As Eldar said, we are developing into a broad energy company, and we've come a long way in a short time. I am confident that we will deliver high-value renewable business in the years ahead. Thank you very much for your attention, and please welcome Lars Christian to the stage.
Thank you, Pål. Ladies and gentlemen, good morning. It is a great pleasure to see you all. It is a privilege to present the 2019 fourth quarter and year-end results and Equinor's very strong outlook. We delivered adjusted earnings in the quarter of $3.6 billion. This is down mainly due to lower commodity prices. Production in the quarter ended at record high, 2,198,000 barrels per day. Compared to the fourth quarter in 2018, production and the liquids share of production increased by 1% and 3% respectively due to the startup of Johan Sverdrup, Mariner, and Utgard. Our realized liquids prices was down 4% to $56.50 per barrel.
Even though we realized higher gas prices than the NBP prices, our invoice gas price in Europe was down 31% in the quarter. The IFRS net operating income for the quarter ended at $1.5 billion, with impairments mainly as a result of change method for tax uplift in impairment calculations for assets on the Norwegian Continental Shelf. Exploration and Production Norway delivered $2.7 billion before tax. Lower commodity prices, lower flex gas volumes were partly offset by new fields in production and higher liquid share, and our 9% reduction in unit production cost. The result is also impacted by a one-off settlement with COSL of around $60 million. For Exploration and Production International, the adjusted earnings were at $247 million before tax, mainly impacted by a 38% reduction in U.S. gas prices and expense and planned exit from our current Turkey assets.
If you exclude increased transportation cost to capture high margins and cost from starting up new fields, fourth quarter underlying cost is at par with the same quarter last year. Cash flow per barrel after tax is $22, which is higher than what we see for the Norwegian Continental Shelf. The midstream and marketing segment delivered a strong result of $524 million, mainly due to strong trading in crude and natural gas. In addition, MMP has obtained higher prices relative to the market. For the full year, we report adjusted earnings of $13.5 billion, down from $18 billion in 2018, mainly reflecting lower commodity prices. Equinor's net operating income was reduced to $9.3 billion, mainly due to impairments and lower commodity prices. Our organic CapEx came in at $10 billion, which is at the low end of our updated guidance due to firm capital discipline and overall good project execution.
Total exploration activity ended down $100 million to $1.6 billion, including $248 million in field development costs. During the year, we completed 42 wells with 18 commercial discoveries, giving a success rate of 42%. Let's move from exploration wells to production wells. Last year, we drilled 86 production wells with a breakeven of $11 per barrel. This is Champions League level for oil and gas-producing assets globally. In 2020, with new wells having an even lower breakeven, I think we will play in the finals. Let's have a look at the cash flow. In 2019, our cash flow from operations was $21.8 billion, including a positive $400 million cash effect from using new digital solutions in our operations.
We paid $8.3 billion in tax. Based on actual tax calculations for 2019, we have overpaid by $700 million. Our tax installments for the first half of 2020 will be reduced by around the same amount. Total capital distributions to shareholders increased by 42% compared to the previous year, with $3.3 billion spent on cash dividend and $442 million on share buybacks. We spent $9.3 billion organically on highly profitable projects. We report $2.6 billion in proceeds from sales of assets and $3.2 billion in acquisitions. We increased equity in Johan Sverdrup, Carcará, which now is called Bacalhau, and Caesar Tonga. We monetized half of our Arkona and entire Eagle Ford position and most of our shares in Lundin Petroleum. After value-enhancing transactions like this, after investing in our very profitable portfolio, in competitive capital distribution, our net cash flow was negative $175 million.
Our year-end net cash flow would have been positive $500 million if adjusted for overpaid taxes. Adjusted net debt ratio ended at 23.8% in the middle of our guided range. More volumes in transit to capture higher margins and overpaid tax in Norway impacted the net debt ratio by around 2 percentage points. Our production for the full year ended at 2,074,000 barrels per day. Our organic reserve replacement ratio ended at 83%, and our three-year ratio is 140%. The reserves to production ratio is 8.6. We brought six fields on stream during the year, including Snefrid Nord, Mariner, Utgard, and Johan Sverdrup. Johan Sverdrup has, during a successful ramp-up phase, already delivered a unit production cost below $2 per barrel. Most of the Johan Sverdrup volumes have been sold to Asia to capture higher margins.
Margareth, Arne Sigve, and Torgrim can give you updates on our fields in the breakout session. Ladies and gentlemen, before I move on to our outlook, I would like to reflect on learnings from the previous decade. The whole industry, suppliers and operators alike, needed to adjust to the dramatic drop in the commodity prices. In Equinor, we started early, but we were reminded of the importance of always being cash flow positive, having CapEx flexibility, and a strong balance sheet. Following these principles allowed us to weather volatility in commodity prices, to act countercyclically to take advantage of opportunities, and to deliver attractive returns to shareholders. It's important to note that these principles will continue to guide us going forward. Recent events, including the effect of the coronavirus on energy prices, reinforces the importance of this. The Equinor of 2020 is a much stronger company compared to 2014.
We have transformed our cost base, our drilling performance, and how we develop projects. We have a very strong balance sheet. Our portfolio is resilient and robust from both a financial and a climate point of view. It is from this strong position that we are able to pursue valuable growth in both low-emission oil and gas projects, in fast-growing renewables, and expect competitive returns over the energy transition. Last year, I said we believe that there is still a significant improvement potential. Today, we increase our improvement ambition by 50%, from two to more than $3 billion in cash flow effect in 2020 - 2025. We can do this because we see larger improvement effects from digital solutions, most importantly from our integrated operations center, called IOC, and higher potential from automated drilling control.
Our objective is to collaborate in new ways with suppliers to safeguard achieved efficiencies, strengthen our cost culture, and applying lean way of working, as well as drive further simplification and standardization. Remember, initiatives like this also helps us improve on safety. Jannicke and Anders will share more details about you in the breakout session, I would like to give you one example of scaling up digital solutions. We started streaming data live from three offshore fields to our onshore integrated operation center in 2018. We scaled up to 20 fields in 2019, we see that IOC-supported fields have higher regularity. By the end of this year, within two years of starting up, we expect all our offshore-operated fields globally to be connected. Our unit production cost continues to be strong at $5.30 per barrel.
We maintain a high focus on improving our competitiveness. We have an ambition to reduce our unit production cost with 5% from 2019 - 2021. To the right, you see the main projects that they provide high-value growth towards 2026 and secure our long-term production. We are operator for 80% of the total volumes coming on stream. Operatorships are important to truly capture the value of our proven technical and commercial capabilities. Our portfolio coming on stream by the end of 2026 delivers an internal rate of return of almost 40% at an oil price of $65. Even in a $50 world, it generates more than 25% annually after tax. This truly demonstrates profitability and resilience.
The break-even supply curve for the non-sanctioned projects coming on stream by the end of the decade continues to improve. Over the years, we have improved both when it comes to lowering breakeven and increasing volumes. We are very pleased to demonstrate that we have been able to more than offset the cost pressure we saw in 2019. Several of these projects are in a very early phase, still being matured and improved. We already see attractive breakevens below $40 per barrel. We see a promising outlook for the decades to come, illustrated by attractive internal rate of return of about $30 in at $65. As Eldar outlined, we see the directional travel for the energy industry. Equinor chooses to invest in renewables for very good reasons. First and foremost, we do this to create value from developing and operating projects.
Second, the renewable business has lower risk, and our future corporate portfolio will be more diversified and resilient with higher level of long-term and stable cash flow. In addition, there is a potential to realize value from portfolio optimization, as demonstrated by our Arkona transaction. All value creation starts with showing discipline and only investing good projects with attractive risk-reward, and only to sanction them when they are as good as they can get. Based on strong value creation, leveraging our technical and commercial capabilities, we continue to see good quality opportunities in this high-growth market. We have an exciting exploration program in 2020 and are targeting high-value opportunities in high-graded prolific basins such as NCS, Gulf of Mexico, and Brazil. Two of these are currently being drilled, Monument in Gulf of Mexico and Araucaria in our Uirapuru license in Brazil.
This year we expect to drill 10-20 exploration wells internationally and 20-30 wells on NCS. In total, we expect to spend around $1.4 billion on exploration, excluding field development costs. This is around the same level as for 2019. In 2018, we experienced strong gas prices, whereas 2019 we saw downward pressure globally as Asian and European markets were well supplied with LNG imports. Our oil to gas ratio differs little from peers, and having assets that are low on the cost curve ensures competitiveness and provides resilience even in a low price environment. Our gas position in Europe is strong with a total supply cost well below $2 per million BTU, with low emissions and with flexibility both in production volumes and when it comes to delivery points. We see this as very competitive against LNG imports and other imports.
We expect a 7% underlying growth in production from 2019 - 2020 and a 3% annual average growth in the period 2019 - 2026 with a growing liquids share. For the four years 2020 - 2023, we expect an organic cash flow of around $30 billion after investments at an oil price of $65 per barrel. I just told you about the high end improved returns in our future portfolio. Today, we give an outlook for CapEx of $10 billion-$11 billion for 2020, 2021, growing to around $12 billion for 2022, 2023 to take advantage of this world-class opportunity set. We only need a yearly CapEx level of around $6 billion to deliver a 2019 production on average for the period 2020 - 2026. Additional CapEx on top of the $6 billion will provide profitable growth in oil, gas, and renewables.
We have and are prepared to use our CapEx flexibility to ensure a robust cash flow in a low price environment. We delivered 9% return on average capital employed in 2019, and we expect it to grow to above 10% in 2020 and around 15% in 2023. We expect to maintain a strong balance sheet, and we have a credit ratings in the AA category. Even in a $50 world, we expect the net debt ratio to remain well within our guided range. The board proposes a 4% increase in the quarterly cash dividend to $0.27 per share. This comes on top of last year's step up with an increase of 13%. We are on track to deliver our $5 billion share buyback program, with the first tranche completed in the market February 4th, two days ago.
Based on an even distribution for the rest of the program, we are announcing a second tranche of around $675 million, including the Norwegian state's share from the 18th of May to the 28th of October 2020. The share buyback program is subject to annual renewal at our AGMs and runs over a period until the end of 2022. On this page, we provide a summary of our guidance and outlook. I hope you see from the material presented today that we are entering a very strong decade for Equinor, as illustrated by a 15% return on average capital employed in 2023, and a $30 billion organic cash flow from 2020 - 2023. We expect competitive growth in production, cash flow, and earnings.
We are committed to deliver competitive capital distribution with a 4% increase in the quarterly cash dividend, and announcement of our second tranche of our share buyback program. By that, I thank you for the attention, looking forward to your questions, and leave the word to you, Peter. Thank you.
Thank you, Lars Christian. Now, we'll open up for some questions from the floor. Just as a reminder, there are a lot of people here from the media. There'll be an opportunity for you to have interviews and questions after we're done with this one. This is a focus on more of the financial side. We'll take some questions from the floor. We've got some roving mics. We'll also take some from the phones. I'm going to start off with Jon Rigby over here, please.
Thank you, Peter. Thank you guys for the presentation. That was my phone breaking. Two questions, one on the results and one on the strategy. If I do the results one first, obviously a feature of the fourth quarter was a strong MMP result, which I think you acknowledged was both gas and oil trading. I just wanted to understand how much of that trading is a feature of your activity in the fourth quarter, as opposed to legacy positions that have gone on over the last one or two years. I'm just trying to understand better how repeatable those kind of results are in the context of the macro that we saw. The second question is looking at your ambition around carbon intensity.
It is subject to obviously the significant step-up in contribution of energy supplied from your offshore wind operations, and also on a reduction of your net by way of CCS. I guess both of those, the wind opportunity is subject to the economics being attractive for you to invest, and CCS, I guess the same, is you need the environment to change and some technological breakthroughs, I would think, to make CCS work. My question there is what gives? If the economics are not there, would you still invest in those things because you want to get your carbon profile down, or would you sacrifice some of that ambition around carbon in order to preserve your returns? Thanks.
Okay. Thank you. Thank you, Jon. I think on the MMP and the downstream part that Irene could answer that and try to reflect on the sustainability of the strong earnings that we had this quarter. I leave that to Irene first, and then we'll come back to the more strategic question. Is that okay?
Okay. Thanks for the question. I actually think the earnings that we made in the fourth quarter is mainly a result of activity in the fourth quarter. What we have been doing lately, on both the crude and the product side, is that we're moving more and more volumes to Asia and taking advantage of the arbitrage between the two markets. With the introduction of Johan Sverdrup, we have the ability to build large vessels and take the advantage of scale in transportation cost. We also had some benefits on the results from additional infrastructure earnings due to Johan Sverdrup. On the gas side, we told you on the gas seminar last year that we're introducing a slightly new way of managing our risk exposure in gas, and I think we're starting to see the results of that.
I would argue that this is mainly due to activity in the quarter that we can hopefully repeat going forward. It's worth noting that the crude trading business has actually made money in 18 consecutive months, even in a backwardated market. It's definitely much easier to make money in a contango market. Quite part of what we have achieved. Good team.
Thank you, Irene. You could have continued to talk about CCS as well. Sit down, please. You'll get a chance to talk about that in one of the breakout sessions, actually. That's now within your responsibility, the CCUS and the hydrogen business. It's a good question. On the longer term, on the transition and the net carbon intensity, we highlight very much renewables and the structure of oil and gas business and the scale of oil and gas business.
CCS, CCUS, and hydrogen as a component. I indicated that we have tested many scenarios, I can assure you, also when it comes to CCS and the hydrogen, more or less. We know quite firmly that to reach the goals now stated in Paris, CCS, CCUS, and hydrogen will have to be part of the solutions. I basically have seen no scenarios without it as a major component. It's not the thing, but it's one of the things that actually needs to work. We also know that we need commercial models to work for this to happen. That needs actually, as a starting point, it's a cost, and you need to finance that cost. A price on carbon is something we are very vocal on. We need that globally. We have that in Norway, in Europe, we need it also globally.
I think also we will see demand changing out there. There will be more demand for clean energy, and for many segments of our society, it's really hard to decarbonize without using oil and gas or taking it into hydrogen. The demand for these kind of commodities will increase and these kind of solution and technologies. We see that in the Northern Lights Project in Norway. Once people out there in Europe industry sees that this can actually become a reality and will become reality, we see a lot of interest coming in. They only see this type of solution as the only way for them to decarbonize, and they have customers at the other end of the equation. Then costs will come down. Technology like on renewables, costs will come down, technology will support it, scale will support it.
These three components, demand, technology costs, and a regulatory environment that will enforce it, will have to make this commercially viable. Next question, how viable? I don't think this will ever be a sort of a major business in its own right, but I do think it is important from a value creation perspective to look at what it does also with the oil and gas and the attractiveness of oil and gas. We think we have to look holistically at what CCS does in the energy space and also what it does with the overall profitability of oil and gas. As a starting point, we would never enter into any projects if they are not standalone as such from a profitability and risk-reward perspective.
Thank you. Got a couple of questions coming through this side, so I've got John Olaisen and then Thomas.
Thank you. It is John Olaisen from ABG Sundal Collier. A question to the $30 billion in estimated free cash flow over the next four years, given a $65 oil price. First, a quick definition of that, what kind of gas prices are you assuming? Secondly, it is after organic investments. If I am right, some of the non-inorganic CapEx will be oil and gas license rounds, wind auction rounds, et cetera. Just that is a definition, then the main question afterwards, please. If you could define that, please.
On gas price?
Gas price and is license rounds and wind auctions included in that CapEx number?
Gas price, 6 NBP and $300 hub compared to the $65 oil price. That's a price stack.
Okay.
The $50 scenario is 5 NBP .
5 NBP .
Right.
Organic, to your point, the inorganic is not included because we don't know what level it will be going forward. This is based on what we have in our portfolio as of today.
What you pay in wind auction rounds and licensing rounds is on top of that?
Yeah. Also historically, you've been a net buyer of assets and of companies.
That would cup on top. Could you elaborate a little bit on going forward, where would you be looking to do further acquisitions in the four years to come that would lower the $30 billion available for shareholders?
First of all, the $30 billion at $65, we last year guided $14 billion at $70. That was over three years. Now we guide over four years. To compare the two numbers, to get the numbers right, you have to add the dividend, $10 billion to the $14 billion, and divide by three and multiply by four, and then you get to around the same number per year, but at $5 lower oil price. It's a much stronger, robust sort of cash flow, a message that we provide you. I think when you look at the portfolio outlook over the next five, six years, that growth, we do that out of a net debt ratio in the middle of our guided range.
We have enough on the plate to deliver that growth, and whatever we're going to do on buying companies or assets, we can cherry-pick and take the time to make it right, huh? That's the beauty about having a strong balance sheet. You don't need to divest to buy stuff, and that's the beauty of having high resources in the bank so that you can take your time to work it. That's why we've done the deals we did in 2019, and that will guide us going forward, too.
Oil and gas is basically, you can't produce the resources more than once. It's about replenishing and building portfolio for the future. You have to build that. There are two ways of doing that, through exploration or through acquisition.
That means we will continuously look for good opportunities, but we have a strong portfolio, as Lars Christian says, for many, many years, and there's no need for us to do anything at all to build resource base, extend it in a meaningful way, high-value opportunities. We have all the time in the world to get this right and make sure that whatever we do is really value-enhancing into our portfolio. By the way, all organic. That also includes all the things that goes into the planned activities and auctions that we might take part in. We also include actually reasonable assumptions from exploration, that you will do exploration and there will be investments coming from that. Part of what we consider to be normal business, but not straightforward inorganic opportunities.
Okay, thank you. Thanks, John. If we just come forward through to gentleman at the front. Thomas Adolff, there we go. Good to see you. Thank you.
Thank you. Thomas Adolff from Crédit Suisse. Two questions from me as well, please. If we go back to slide 14, that's the one on the net carbon intensity. You show there five buckets how to get there, and the second one is the oil and gas split and scale. I wondered whether you can be a bit more specific on what types of portfolio shaping moves are necessary to really hit this second bucket. Will overall production be lower versus today, or will it be simply a shift towards more gas from oil? Then second question, maybe also linked to the first question. Obviously, the upstream business today pays for your dividend and also for the nice buyback you're doing.
Your longer-term targets for the renewable business of 12-16 gigawatt, and correct me if my math is wrong, probably can offset a $10 decline in the oil price at the operating cash flow level. Of course, renewables is long-lived, as you've highlighted, and it's lower capital intensive. Together with the comments on oil and gas, whether it's a lower production base, how should one think about the capital intensity of the business longer term, and the capacity to basically pay the dividend as it stands today? Thank you.
First on the net carbon intensity, on the oil and gas part of that, I indicated in my introduction that there is a lot of optionality, and there's no way of prescribing exactly what this will look like. I also said that we will, in a low-carbon future, in this scenario, there will be less oil and gas. IEA scenario tells us that the world will need approximately half the oil and gas compared to what it does today in a well below 2 degree scenarios. We will have to sort of be part of that, and it will be reflected in our portfolio. That's what we expect. Exactly what this will mean, it's really hard to say. What will have the biggest impact on this KPI, which is an intensity KPI, is basically reflecting the energy that we produce.
If we don't produce it doesn't go into this intensity factor. Basically, renewables is by far the biggest component into this. As you say, shifting between oil and gas will have an impact because there's lower Scope 3 emissions on natural gas. We do see that our portfolio over time actually will be more gassy than oily, looking at the portfolio that we actually have, because gas assets typically are longer-lived assets than oil assets. That's part of what will happen. To what extent that will change compared to our current portfolio is hard to say. We know it is possible, is doable, it will have that kind of impact, and we also know that scale will have some kind of impact. We also know that actually the operational efficiency is very much related to what we have put targets forward on that.
It's also going to have a big impact when you produce oil and gas. I can't be more precise. It's impossible for us to be more precise on exactly how this will look like. We know the components, we know how they will work, and we know that renewables is definitely the most important part of this equation to get to this target. On the composition and the profitability here, we see an impressive portfolio ahead of us when it comes to oil and gas. We have indicated very competitive returns compared to the risk group, if you look at the risk-reward balance within renewables. We have seen and we have tested many scenarios and seen at what kind of cash generation capacity comes out of this gradual transition where we do more renewables and different scenarios, also lower oil and gas.
They all come out with a strong cash generation capacity. It has to do how you actually combine this portfolio and what are the speed of this transition going forward. At 6% to 8%, 10% real return, and on top of that, the equity component and the nominal component, that is going to give us a quite substantial capacity to deliver continued shareholder distribution and competitive as well. I don't know if you have any comments to this, Lars Christian.
No, just one, because it's so easy to compare the returns on renewable projects with the oil and gas project. Please remember that there are some associated costs in addition to running an oil and gas company that you don't have for the renewables business. We are very comfortable to your point for the period of time that we are showing here today. Beyond, it's going to be very dependent on the levers and what the composition of the company looks like going forward. We will keep you posted on it, but very strong outlook towards 2026.
Got some questions coming over here. I'm going to start with Alwyn, who's the gentleman there
Hi, good morning. Alwyn here from Exane BNP Paribas. I guess just to start with, can you maybe quantify or discuss some of the risks to cashflow ambitions this year due to what's happening in Asia, and obviously low gas prices and some of the impacts it might have around trading, as well as other parts of the business? Just some commentary there would be helpful. Splitting out your CapEx guidance, particularly the step up towards $12 billion in the long-dated era. Is that equity CapEx after project financing? Maybe could you just say a little bit around whether you're stepping up R&D or research spend within that as we move towards new energies, new technologies, and perhaps beyond that, whether you'll be splitting out the renewables or new energy solutions part of the business in terms of earnings or cash flows? Thank you.
You managed a lot of questions in one go there.
A few more.
Okay. I'll cover some of this. Let's start with the gas prices. We know where we are on gas prices. We are down there. It's cyclical. We see that the global gas business is becoming one. It's not a regional business anymore, it's really a global commodity. Looks more like the oil transition that we saw many years back. Right now, and also last year, we are heavily impacted by a lot of new LNG capacity. It was predictable, not a surprise. We know the timelines. Also slightly muted demand growth in Asia in particular. Right now really high storage levels all over. On top of that, temperatures, that does stimulate demand. The combination of the current situation keeps it muted and a weak market. We expect that to be the situation for a while.
This year, also deep into 2021, we could be surprised from temperatures, but you can see that from the new energy projects being fed into the supply side. This will start drying up, and demand will continue to grow. There are many factors that has come into this, but we at least do see a more balanced gas market going forward as we are heading deep into 2021 and into 2022. That is a pretty robust projection from our side. I don't know if, Irene, do you want to add something to the gas perspective here? You make money on top of it.
I think it's a very good summary. The only thing I would add is that the low prices does create demand, and we've seen additional demand come in in Europe, and we've seen additional demand, for instance, in Pakistan and Bangladesh. There is some good news to the story as well, but it's a pretty dire picture for the next year and a half at least.
Thank you, Irene. The question on CapEx guidance on equity and project financing. Maybe you comment on that, Lars Christian.
Yeah, we do this growth out of strength. We have the capacity, both when you look at the balance sheet to do it, we have the capacity if we look at the organization to do it, and we have the opportunity set, our portfolio set of opportunities we already have in-house to build that pipeline. Back to my comment earlier, $6 billion around that is what we need to just sustain the production level of 2019 towards 2026. Everything on top of it is to grow in oil, gas, and renewables. To your question on whether renewables should be a segment or not, sort of separated out, it's too early to say that we will report it as a segment. It's not material enough yet.
We understand that there is a sort of urge for giving you more information and insight into it, and that is why you see this year that we provide you with more visibility. This is about the production-based availability, production outlook, capacity outlook, CapEx outlook, portfolio achieved prices, which was around GBP 160 per megawatt-hour, wasn't it? Returns, both existing portfolio producing and the forward-looking one. We are going to provide you with more and more visibility as this business grows. No plans of separating this out.
I guess there could also be an implicit question in that, are we planning to split up the business? We are not. Definitely not. I think Pål highlighted very much the synergies and the strength it gives us actually coming from the oil and gas competence and integrating that and benefiting from that into the renewable space where we focus. That is so strong that we will pick the best from what we have, our legacy, our competence, at the same time as finding what is unique for this business. That is not an idea that we are pursuing. R&D, maybe Anders have been thinking a little bit about that now, so he can offer some comments on that.
Yeah. We are going to spend NOK 2.8 billion in 2020 on R&D. Also remember that we are testing new technology in our projects and our wells as well. We are not guiding any R&D beyond 2020, but as we ramp up production in Brazil and Canada, there will be more obligations. Then we will have R&D in line with that. For 2020, also 25% of our spendings at R&D will be in low carbon solutions.
Pål, any comments from you?
One of the main points that I made was very much around the benefits of being part of a broad energy company like Equinor. If you're very specific, I have access to the full technical capability of Anders, Arne Sigve, Jannicke on the digital side. I have full access to Irene's commercial people on the market side and the power trading. I use a very simple example sometimes. If I need a 20% material engineer, I buy that from Anders. I don't hire one 100% and use him or her every Friday.
Thank you. I know we've got some questions around the same table, but I'm trying to take these in the order I saw them. It's the gentleman on the front row there, and then we'll come back to that table.
Thank you. Is this mic on? There we go. It's Anders Holte from Kepler Cheuvreux. Thanks for a solid presentation. I guess robust is the keyword for this year's CMU. Just a few questions, if I may. First of all, I know you've refrained from giving a break-even oil price required to cover all of your CapEx and also your shareholder distributions for 2020. I'm guessing you're going to try to refrain from answering it because there's a lot of moving parts, and I think we realize that. At least at what oil prices does Lars Christian feel the heat a little bit before he starts to tap into the net debt figure? Second question is more on Dogger Bank. You mentioned that the returns, I think the return guidance at 6%-10%, it's a solid figure.
Also you mentioned that you have already locked in quite substantial cost reductions on Dogger Bank. I'd just like to pick your brain in terms of how much are we actually talking about here in terms of the original investment guidance provided by you previously?
To talk about oil price and where we are now, it's complex. We know sort of the pressure points and there's a lot of responses, OPEC responses so on. We know that last year, the Brent Blend was almost $64 per barrel, and we saw a lot of volatility throughout the year. That's also been part of this year. Basically, resilience is the recipe for us and robustness, as you said. We illustrate 50, 65, and 80 to give you sort of the wide range. That is mainly the mentality where we build our business and build our operational efficiency. You might want to comment more specifically.
A couple of years we have done the numbers and showed you and based on a $70, now we're taking it down to 65. Average last year was 63.8, so it's kind of where we are over the last year or so at least. When we have done the calculations for 2019, if exclude the share buyback, we were around $50 when it comes to being cash flow positive after according to then what we guided. We're very comfortable with the composition. Very.
Pål, on the second question.
Yeah, on Dogger Bank, the short answer is there is no updated sort of guiding on cost. The number that is out there should not be treated as a sort of a firm estimate. It's a ballpark number to give people a sense of where we are. What we are is chasing every value pocket and every cost there is, and we will do that all the way from now till we start production. There's no updated number for you. Sorry.
Okay. Another couple of questions from those, then we're going to take a couple from the phones and then Josh.
Good morning. Mehdi Enebati, Bank of America. I will ask two questions, please. Follow-up one on CapEx and one on the share buyback. Regarding the CapEx, you guided on a $10 billion-$11 billion CapEx in 2020-2021, then growing to $12 billion. I just wanted to know if the CapEx growth will only come from the renewables, meaning that you intend to keep the upstream CapEx at the same level and still deliver a 3% production growth with roughly the same upstream CapEx, until 2026. Second question regards with the share buyback. You announced it in September. Since then, the hydrocarbon prices have been moving a lot. You provided a maximum, let's say, share buyback program of $5 billion, but you never said what would be the minimum.
If the hydrocarbon prices, meaning oil and gas prices, remain at the current level for a couple of years, would you still be realizing the share buyback of $5 billion or revising it down?
Okay. On the CapEx guiding, we have indicated in Pål's presentation what will be the CapEx spend over the next few years, $0.5 billion-$1 billion of this year or next year, $2 billion-$3 billion. That is a gross number for 2021 and 2022 or 2022, 2023. You will have project financing that goes into that. Into our CapEx number, you will have a lower investment number. We will definitely, and I'm taking off 50%-20% of our CapEx within two to three years. It will definitely be a bigger portion of our CapEx spend when we start guiding at $12 billion. Roughly speaking, you're right. You are pretty much in the same range, not precisely, but in the same range on the oil and gas part, you have renewables part.
It's not a precise answer, but roughly in that range given the guidance that we give on renewables and CapEx spend on renewables. On the buyback. We are very confident on the buyback program. Obviously, we state that if given circumstances, we might change the program, but there's no plans, and we're very comfortable with the price levels that we have seen and see today to continue on the buyback program. There's a lot of factors that goes into this, but I'm not opening up any uncertainty at all in the current environment and what we see, and we have showed you resilience, a robust that we can actually do the buyback program even in a $50 environment. That'll be very comfortable in relation to our debt ratio.
There's no concerns, in the current environment and even lower environments on our capacity, willingness to pursue the buyback program. To increase the predictability, we simply say now, instead of just picking a number, we say now we front loaded it, with numbers you introduced and then now we say an even distribution depending on how many trading days there are into each of the tranches. That is sort of the kind of principle that we are pursuing now. Lars Christian?
The way I look at it, you should read the second tranche announcement as not only a visibility, but also confirmation for the remaining period until 2022.
Thank you. Another question from
Thank you, Yoann Charenton from Societe Generale. To echo some of the question we ask at this table, on CapEx, it's clear that you have demonstrated that the level of activity across the group is pretty high, versus history. At the same time, if we look at the past few years from a pure financial perspective, you have consistently, underspent versus guidance and you save $ billions. I would like to better understand how we should think about the CapEx guidance you commented on today, and if we should look at this guidance with the same sort of lenses, we had to look at your prior guidances. On production, just to come back on two very short-term sort of implications of the situation you described with extremely low gas prices across the Northern Hemisphere.
We can remember that in 2019 you had to defer significant volumes of gas that was aimed at supplying Europe. How much is built in in terms of gas volume deferral in your 2020 guidance, please?
On the deferral of gas, we are very cautious to give volumes and definitely not guidance because that would be sort of very sensitive market information. Basically, when we predict the future, we don't add any assumptions on that. It's basically deliver what is the base assumptions in the production permits. Production permits gives us some flexibility, but we don't take that into account. It is something that if there are deviations from this, we will explain that and introduce it as part of decisions that we make continuously. It's not part of our guidance as such. On the CapEx?
Yeah, on the CapEx side, it's been a privilege to report that we in many ways have come under the guiding over the last couple of years, thanks to an excellent project execution. Hopefully we will be able to replicate, at least that's what Anders and his team is trying to do, whether that is in oil and gas, on behalf of Arne, Sigve, and Margareth, Torgrim , or Pål in the renewable space. Not only that, we want to be even better. This is based on our best estimate, the numbers that we provide you, and that's a 50/50 number. I can't sit down here and say that it will come below, because then I should have given you a lower number.
I guess I could just invite you to take part in the breakout session. You will hear how we talk about both the digital, the savings that we have done, on Yoann's for instance, and how we perform on drilling performance compared to the industry on project developments compared to the industry. They will show you that it's quite impressive number. It's this performance that is actually giving us that. Starting point, start of the year, we give you what the best estimate I can assure you.
Okay. We've got one more to come from the floor, but with the first come, first served. I think we're just going to take a short break, take a question from the phones.
We will take the question from Anne Gjøen from Handelsbanken. Please go ahead. Your line is open.
Thank you. I wonder if you will do some term of inorganic investments. If you find it economically attractive, will you still be interested in opportunities when it comes to shale in the U.S. or in Argentina also? Could we more rule that out because you have so many opportunities elsewhere and because of environment reasons? Thank you.
Okay. Generally speaking, we always look for value creation opportunities. Sometimes we see that when it comes to acquiring assets, we see if we can do better, we can do more, we can create value on top of what we buy. Other times it's about divestments. We see that others can do better than we can. We divested Eagle Ford, for instance. We think Repsol can do a better job and let them give that a try. This is really what this is about. We pursue these kind of opportunities generally within quite big space. I will now ask Al, actually. He might not be prepared, but now give him a chance at least to comment on how we think about that from his perspective, because he's running that part of our business.
Thanks. I think the first thing to say is that we look at each acquisition on a case-by-case basis. We screen them primarily on value, and then we also have a separate screening process for climate, for carbon emissions, and for safety, and a few other factors as well. I think in some sense, you can see the direction we've been in over 2019. You've seen the acquisitions we've done, strengthening our position in some of our core areas, the additional equity in Johan Sverdrup, the growing position that we're building in Argentina, the growing position that we're building in the Gulf of Mexico. You'll see that those assets demonstrably add value, build in our core areas, but are also in line with the direction we're taking on climate change and on reducing our global carbon intensity.
Thank you, Al. On shale more specifically, we did a transaction, as I mentioned, during last year, high-grading our portfolio within the shale. We also built shale business activities in Argentina, building a position there, very high-quality acreage that we are working on. I think it fits nicely into our portfolio. It has the flexibility that is very useful in our portfolio, both from a CapEx spend perspective, but also from a commodity perspective. We can decide when we would like to produce these volumes from a commodity perspective. Torgrim, you might want to add something, what you're doing to address that business.
Thanks. We all know that the history of U.S. onshore has been a bumpy road for Equinor. We have made significant impairments as we acquired assets in a very high price environment, and that didn't stand the test when prices collapsed. I always need to start with that when I talk about the U.S. onshore activity. When that is said, that business has been through significant improvements over the years, and now recently, high-grading the portfolio. That part of the business is contributing positively to the bottom line and has done that over the last few years. Competing fairly well compared to others, but clearly we have much more to do to improve this business even further. Clearly it is something that we aim to, that business to contribute very positively to the future of Equinor.
Particularly we see in the northeast, in Appalachia, that business still makes money even if we are facing gas prices around $2 per MBtu. Yeah.
Thank you.
Okay. Thanks very much. Going to come back into the room. We've got at least a couple of questions, three, and then we may be calling it a day. Josh?
Thank you, Peter. It's Josh Stone, Barclays. Just have one question on your renewables capacity available target in 2026 of four to six gigawatts. It looks like that's an outcome of your existing projects. I want to know to what extent you actually see some upside to that number from future license rounds coming up. Are you making any assumptions in there for a continued farm-down of your projects as you develop them? Thanks.
I hand this directly over.
Yeah
head of that business.
No, you're right. It does, to a large extent, reflect the existing portfolio and the projects that we have accessed already. As I said in my introduction, we are positioning for additional lease rounds and in the core areas, because we see a lot of value, actually, in concentrating that growth to some areas to get the economies of scale in those particular areas. It will not prevent us from positioning for new opportunities in different parts of the world. We see Asia coming now in a very significant way, and it's likely to become the new engine of growth in that area. The portfolio management bit, optimizing portfolio, will be a part of our business model, but I won't conclude on if and when and in what assets, et cetera. It is a key source of value creation for us going forward.
Thank you. We've got Valeria and then Kate.
Thank you. Valeria Piani from UBS Asset Management. Big congratulations for your new ambitions on climate change. It is great to see this step up from the past. I have a question on your ambitions on almost zero emissions for the Norwegian continental shelf. What is blocking you to do the same for international operations?
I might touched upon it briefly in my introduction, basically. In Norway, we have the framework. First of all, you need energy to produce oil and gas. In Norway, electricity can be picked up from the grid. It's a renewable grid, basically. It's all about renewable energy. We have actually more renewable than we use in Norway. We have a surplus that is available for our industry. We also have a price of carbon. On top of that, we pay EU ETS quotas. We have a double tax in a way. Generally also a framework conditions in terms of the tax system that incentivize investments into these type of efforts. That's why this actually makes sense. The sum of these components makes it profitable. This enhances the value of our portfolio in Norway.
Internationally, depending on where we are, we don't have that electricity. It's not available. We don't have the same type of cost related to carbon emissions, in some cases not the overall financial framework either. It's a different situation depending on where we are in different countries. Basically, when we work internationally, it's really about addressing how we produce the oil and gas, what we do with the gas. Do we inject it? That takes energy. How the economics of that work, the energy efficiency overall into our operation, the turbines, the compressors, and so on. It's very much done through the configuration and the shaping of project. It's becoming more important how we actually shape our project. We will be as vigorous on the international portfolio, and we will take down our footprint also internationally.
You will hear more about that vision later today, actually, how we work on that. The toolbox is slightly different. We work just as hard, and the overall combined target for us now is eight kilos per barrel produced globally in the corporate portfolio, as we are heading towards actually zero on the Norwegian Continental Shelf. That is a journey from where we are now to zero by 2050. 40% will be taken out by 2030.
Thank you. One more question.
Margareth would like to comment.
I want to comment on the international part because we are planning for having carbon intensity at below 10 in 2025 for all international operations, also for the portfolio internationally. I can say we do not have the same levers as we have on Norwegian Continental Shelf, but still we manage to do some very good CO2 reduction project. For instance, on Peregrino, we are importing gas instead of using diesel. This is less cost and it's less emissions. In this project, we are reducing it with four kilos per barrel also. We are trying to utilize all the competence and the big Equinor also internationally.
Just highlight methane emissions. I gave a number, 0.03. That is a very low number globally, and it goes across our whole business. Obviously you don't want to have methane flowing around on any place where you actually do your business. By the way, we can sell that in the market or use it for other meaningful purposes. That's our philosophy that's very strongly embedded in how we shape our business and do our projects, also in the U.S. onshore part of our business.
One more question from the floor, from Kate in the middle. Thank you.
Kate O'Sullivan from Citi. Thanks for the presentation. Just a quick one, probably for Lars Christian, as we ramp up Johan Sverdrup through 2020, how can we think about the tax impact? Have you any more detail on that?
The tax impact?
Yeah, so-
Oh, Johan Sverdrup?
Yeah, cash tax.
Yeah. The cash tax or cash contribution of the tax for Johan Sverdrup is very robust, and we expect it to be around $50 in 2020 for this year per barrel.
Okay. That's at 70.
Yes, that's around that one.
The timing and the phases-
The cash cost is $2 a barrel, I think, on Sverdrup cash costs. Less than that.
Less than two.
Okay. Ladies and gentlemen, we bring this part of the session to a close. Just as a reminder, there'll be an opportunity now for the media to talk with the speakers. For the analysts and investors, it's a short break. There's lunch, and then we will reconvene. We'll take you to the various breakout rooms, and we'll kick off. We want the people in place ready for 12 o'clock. Eldar, would you like to-
No, I just want to, we're probably not coming in after the breakout session, so I just want to say it now. Really appreciate that you are here today, all of you. I brought the whole team here because we think this is a really important event. They are available for you on various occasions. We have the breakout sessions, so hopefully you will be able to join them and go through a lot of interesting material. I will not repeat the storyline that we told you today, but it's really a strong proposition. Just look at it, get into the numbers, and see what this actually tells us about our capacity to generate cash returns going forward, and also how we relate to the transition, and how committed we are to capital distribution. Make sure you capture what we are telling you today.
Thank you very much.
Thank you.