Norway's state-owned Statoil said yesterday that falling oil production on the Norwegian continental shelf depressed operating profits in the first half of 1999.

Statoil said, however, that the benefits of a strengthening krone and good management at its insurance arm more than compensated for the loss in output and lifted net results by 26 per cent.

First-half operating profits at the Stavanger-based company fell 21 per cent to 4.8 billion krone (€577.5 million) from Kr6.1 billion.

Statoil said the decline primarily reflected lower oil output. Oil production between January and June averaged 429,000 barrels per day, down from 471,000 in the same year-ago period.

"Despite the progress from the first half of last year, this result is not satisfactory," outgoing chief executive Mr Harald Norvik said in a statement.