Norway state oil group Petoro's Q4 output falls

OSLO Feb 28 (Reuters) - Norwegian state-owned petroleum company Petoro reported a 6.7 percent drop in oil production for the fourth quarter on Thursday though higher gas output kept total production steady.

Oil and natural gas liquids (NGL) production fell to 664,000 barrels per day in the fourth quarter from 712,000 bpd a year earlier, Petoro AS said in a statement.

But fourth-quarter gas production rose 14 percent to 96 million standard cubic metres from 84 million scm in the same period a year ago, boosting total output to nearly 1.27 million barrels of oil equivalent per day from 1.24 million boed.

Total 2007 daily production amounted to 1.20 million boed, on par with 2006, with full-year oil and NGL production down 9 percent but gas output up 14 percent.

Norway is struggling to maintain oil production against a declining trend as production from ageing North Sea oilfields tapers off, though Norwegian gas production is growing steeply.

Stavanger-based Petoro has no production operations of its own but manages the Norwegian government's direct interest in oil and gas fields off Norway. The company transfers nearly all its profits into the government's coffers.

Profits after financial items rose to 31.74 billion Norwegian crowns ($6.09 billion) in the fourth quarter from 31.46 billion in the same quarter a year earlier.

For the full year 2007, the stakes in Norwegian shelf fields yielded net cash flow to the state of 112.3 billion crowns, down from 126.3 billion in 2006, Petoro said.

"The principal reasons why (2007) results were somewhat weaker than in 2006 were lower oil production, increased operating costs and reduced gas prices," Petoro said.

Chief Executive Kjell Pedersen said in the statement: "We are...seeing an increase in costs which partly reflects high oil prices and a tight market."

Operating costs grew by 8.1 billion crowns to 53.2 billion.

"Fields, pipelines and land-based plants cost 32 percent more to run than in 2006," Petoro said.

The average price of oil from Petoro's portfolio of holdings was little changed at 418 Norwegian crowns per barrel in 2007, up from 412 in 2006, the company said. In U.S. dollars the average price rose 11 percent to $71.4 per barrel, Petoro said.

The result followed below-forecast earnings from state-majority oil and gas group StatoilHydro (STL.OL) on Wednesday. (Reporting by John Acher)