Norway to sell off up to 25% of Statoil
Norway�s Statoil was lined up for partial privatization next year, as the country�s Labour government Thursday announced long-delayed plans to restructure ownership of both the energy giant and the package of reserves on the Norwegian Continental Shelf owned directly by the state, known as the SDFI. Under the proposal, 10-25% of Statoil would be floated as early as next summer on the stock market as an initial public offering, and 20% of the SDFI assets sold.
LONDON� Norway�s Statoil was lined up for partial privatization next year, as the country�s Labour government Thursday announced long-delayed plans to restructure ownership of both the energy giant and the package of reserves on the Norwegian Continental Shelf (NCS) owned directly by the state, known as the SDFI.
Under the proposal put before the Norwegian parliament, the Storting, 10-25% of Statoil would be floated as early as next summer on the stock market as an initial public offering (IPO), with the government retaining at least two-thirds of the shares in the company.
The specifics of the IPO, however, will not be finalized before the Storting�s spring session. The parliament will also set a date for the offering.
In a statement released late yesterday, Norway�s Ministry of Petroleum and Energy stressed that while �expansion of the ownership will supply new expertise, new partners, and new capital,� its proposal aimed to make sure a partly privatized Statoil would continue to be a �Norwegian-based company.�
Statoil�s headquarters, its �top management, its decision-making authority, and strategic functions,� in keeping with the ministry�s proposal, would remain in Norway.
The ministry added that the option to enter into �equity-based strategic alliances� with other companies would be open to Statoil, but only after the company was floated.
Along with the partial privatization of Statoil, Norway�s government also put forward plans to sell 20% of the country�s direct financial interest (SDFI) assets on the NCS. The ministry said it would preserve its ownership of the outstanding 80%.
Before next year�s floatation, the government expects to sell 15% of the SDFI�estimated by some accounts to be worth some 230 billion kroner�to Statoil through a cash and equity capital transfer arrangement. Another 5% will be sold to Norway�s second largest oil company, Norsk Hydro AS, and �other [foreign] companies,� which will pay cash for the assets.
Under the government recommendations, the SDFI asset portfolio would be managed by a new state-owned limited company based in Stavanger. The new company would not be granted operatorships, but would �fulfill its purpose without possessing the same expertise as traditional oil companies,� said the ministry.
�The SDFI assets will be managed by the company, at the account and risk of the state,� said the ministry. �Costs and revenues relating to the assets will continue to be channeled through the state budget.�
As part of the SDFI redistribution, the ministry said it was proposing a �swap� with Statoil of interests in the Europipe II trunkline and �selected fields� and its stake in the Norpipe and Statpipe pipelines, as well as a change in the ownership structure of the crude oil terminal at Mongstad, through which the government would gain a stake in the facility.
The government also proposed setting up an independent company to handle transportation of natural gas on the NCS. This organization would be set up as a limited company but be wholly owned by the state �until a lasting ownership structure in the pipeline system on the NCS has been established.�
Statoil Chief Executive Olav Fjell, who has long advocated privatization in tandem with a complete take-over�as �caretaker��of the SDFI, said the government plans would give the company �greater strength and freedom of action� through an IPO, but was �disappointed� the proposed SDFI redistribution didn�t �live up fully� to recommendations drawn up by Statoil.
Fjell said production from Statoil would be boosted to 1 million boe/d from some 700,000 boe/d through the addition of 15% of the government�s SDFI asset portfolio.
In a statement, Fjell emphasized that the Labour administration had gone �some way� toward meeting Statoil�s call to use SDFI holdings industrially to �boost value creation and develop the group�s gas position,� adding that the government had �laid the basis for continuing work on a number of the value creation opportunities identified off Norway,� particularly in the Tampen area of the Norwegian North Sea.
Fjell believes the proposed plans to create a independent company to transport Norwegian natural gas, which would result in Statoil losing �important responsibilities,� would lead to an �unnecessary weakening� of the company he heads.
�In our view,� he said, �the government goes further than necessary to satisfy the European Union�s requirements on neutrality for gas transport.�