Norway setting up its stall

Lining up Norway's 30-year-old state-owned oil and gas giant Statoil AS for partial privatization, while at the same time reapportioning a slice of the country's lucrative stake in its offshore assets, the SDFI, has, understandably, been a slow-rolling process for the Scandinavian country.

Lining up Norway's 30-year-old state-owned oil and gas giant Statoil AS for partial privatization, while at the same time reapportioning a slice of the country's lucrative stake in its offshore assets, the SDFI, has, understandably, been a slow-rolling process for the Scandinavian country. To non-Norwegians, it has also been a largely opaque one, as stock market regulations have meant a black-out in US publications of new information regarding the company in the run-up to its initial public offering.

But with the words, "We'll be ready to go to market from June 18," Statoil CEO Olav Fjell last week finally fired the official starting gun to give institutional investors their first look at the company's books.

Premarketing of shares in Statoil via a prospectus promoted by advisors UBS Warburg AG, Morgan Stanley Dean Witter & Co, and Norwegian brokerage house DnB Markets AS has now starting in earnest; and Statoil will kick-start its own road show at the end of May.

Biggest Nordic IPO

The offer should prove sufficiently alluring, for floating 15-25% of Statoil on the Oslo and New York markets will, irrespective of whether the company garners fair market value, result in the largest single IPO in the Nordic region's history.

Some analysts have calculated Statoil's market value to be as high as $22 billion, a figure bolstered by the recent acquisition of 15% of the SDFI for $12.4 billion (see related story, p. 36).

It remains to be seen whether enriching the state-owned company with these assets-which include interests in 10 of the Norwegian Continental Shelf's largest producing fields-before the IPO will overcome the early skepticism voiced by some over the government's "ill-defined" model for Statoil's partial privatization.

Commerzbank AG oil analyst Clay Smith, for one, initially foresaw problems for the IPO if the 25% ceiling on Statoil's sell-off is not raised. Floating what he felt was as an "insufficient" percentage of the company risks having the market "totally ignore" the listing. He has not substantially changed his view.

With a 40-day legal lockout, as of June 18, of analysts not connected to Statoil's primary share issue, Smith is concerned the "actual attractiveness" of both the company and its beefed-up asset portfolio may be jeopardized by "questions over the independence of (Statoil's) valuation."

Revolution on the NCS

The delicate partial privatization of Statoil is, in the end, only one facet of a revolutionary, government-driven transformation being undertaken in Norway's oil and gas industry. Among other recent news, certain to fundamentally change the face of operations on the NCS, the Norwegian government has established one independent company, Gasco, to run the country's offshore gas transportation grid-hitherto operated by Statoil-and another, Petoro, to handle the assets previously known as the SDFI.

Radical as the structural changes being adopted to ensure the future of the Norwegian oil and gas industry are, a strain of conservatism, at least as far the new oil and gas management companies are concerned, has shown itself in the government's choice of bosses. Gasco will be headed up by Brit K.S. Rugland, a former economic director at Statoil, while Petoro will take its orders from "working chairman" Tore Sandvold, until now director-general of the Ministry of Petroleum and Energy's Oil and Gas Department.

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