Oil companies file bids for Norwegian government's industry holdings
By the OGJ Online Staff
LONDON, Jan. 10 -- More than 20 of the world's largest oil companies are believed to have bid before Thursday's deadline for the sale of a 6.5% share of the Norwegian government's industry holdings.
The sale, expected to be completed by mid-February, is likely to raise $1 billion for the Norwegian treasury. Confidentiality clauses in the bidding documents have kept the names of the companies secret, but almost every firm active in the Norwegian offshore industry is expected to seek to increase its financial stake in this mature and stable province.
Norway sold 15% of the State's Direct Financial Interest (SDFI) in its oil industry with the partial privatization of Statoil ASA last year. It plans to sell another 6.5% this year, a policy unchanged by the government that took over in November.
The SDFI was established in 1985 by dividing most of Statoil's production licenses on the Norwegian Continental Shelf into a direct financial interest for the state and a commercial share for Statoil.
An SDFI share has been included in nearly all production licenses awarded since its establishment. The size of the share is related to the profitability and resource potential of the individual production license.
Under the SDFI system, the Norwegian government pays investment and operating costs related to its percentage interest and receives a share of production and other revenues on the same basis. On some fields the SDFI can be as high as 77%; in others, as low as 5%.
The SDFI represents substantial state assets and revenues. Through this arrangement, the state is a direct participant in more than 150 production licenses as well as in pipelines and land-based plants. Originally, Statoil managed operational and commercial functions for the SDFI on behalf of the government, but since Statoil's privatization, a new company named Petoro has assumed that responsibility.
The Norwegian government plans to continue taking SDFI assets in future licensing rounds. It will restructure the way it holds the assets to give companies increased license interests.
The Energy Ministry said, "Larger holdings will provide companies with stronger incentives, allow them to take better advantage of economies of scale and coordination benefits in and between production licenses, and strengthen the decision-making processes. This will enhance exploration, development, and operational efficiency as well as extending production.
"Neutral and efficient utilization and development of natural gas transport and processing facilities are important for realizing the value of Norway's natural gas, and must be viewed in a long-term perspective."