EU, Statoil, Norsk Hydro settle GFU gas sales dispute

By OGJ editors

HOUSTON, July 26 -- The Competition Directorate General of the European Commission has reached an amicable agreement with Norwegian North Sea producers Statoil ASA and Norsk Hydro AS, settling the long-standing "GFU (Gas Negotiation Committee) case."

The case stemmed from charges that Norwegian offshore natural gas producers were fixing prices and competing unfairly with European Union nations through Norway's now-defunct GFU, which negotiated gas sales contracts on behalf of the country's offshore producers. Norway is not yet a full member of the EU.

The Norwegian Ministry of Petroleum and Energy discontinued the marketing of Norwegian North Sea gas through GFU in June 2001, when that entity was abolished, and the producers were instructed to market their gas individually (OGJ Online, May 30, 2001).

There was no comment from the EC as to the disposition of disputes with other members of the GFU. Although Norsk Hydro had sharply disputed the EC's statement of objections that the commission sent to Hydro and Statoil last year (OGJ Online, June 18, 2001), its agreement settling the case was said to be amicable.

Statoil settlement
Under terms of the settlement, the EC will close its case against Statoil, and Statoil, during June 1, 2001-Sept. 30, 2005, will offer a total of 13 billion cu m of natural gas for sale to new customers on commercially competitive terms and conditions.

Because Statoil's sales are retroactive to June 1, 2001, a portion of this gross volume has already been sold to such new customers. Statoil will attempt to distribute the balance evenly over the period.

For purposes of Statoil's agreement, the definition of "new customers" is all creditworthy undertakings within the European Economic Area (EEA) that were not among Statoil's long-term customers prior to 2001.

At the time, EEA was the biggest multilateral trading zone in the world, consisting of the 12 EU member states and members of the European Free Trade Association: Norway, Finland, Sweden, Austria, and Iceland (OGJ, Jan. 24, 1994, p. 23).

Statoil has agreed to the sales without any admission that the company's marketing or GFU gas marketing activities constituted an infringement of the competition rules of the EC or the EEA.

"We are satisfied with the agreement we have reached with the EU today," said Peter Mellbye, executive vice-president for Statoil's natural gas business unit. "The commitments we are taking on are in accordance with Statoil's business strategy."

Norsk Hydro settlement
Norsk Hydro, which also confirmed that it will market and sell its gas individually, has agreed to make available, on commercially competive terms, a total of 2.2 billion cu m of natural gas to new customers during June 1, 2001-Sept. 30, 2005. Part of this volume has already been contracted.
"I am very satisfied that this matter has been resolved in such a favorable manner," said Hydro's CEO and Pres. Eivind Reiten. "The sales commitments we have made will be discharged within the scope of the strategy drawn up for Hydro's sales of gas. We are also very pleased with the cooperation we have enjoyed with the Norwegian authorities in this manner, " he added.