Statoil

Statoil, the Stavanger, Norway-based state-owned oil and gas enterprise is engaged in petroleum exploration, production, transport, refining, and marketing. The company also manages the state's direct financial interest (known as SDFI) in oil and gas partnerships active on the Norwegian continental shelf.

One of the world's leading oil producers, Statoil boasts proved reserves of 1.6 billion barrels of oil and 8.8 trillion cu. ft. of gas. Its exploration and production activities outside of Norway's continental shelf are focused on the North Sea and the Atlantic waters of Western Europe, the Caspian Sea, and offshore Venezuela and western Africa. To focus on its core areas, Statoil is divesting its US exploration and production operations.

However, the US is still a major market for the company's exports: Statoil ships about 500,000 barrels of oil per day to the US and Canada. It is also a major exporter to Asia.

On the retail side, Statoil operates 1,500 service stations in Scandinavia under the Statoil and ICA Express brands, as well as others in Ireland, Poland, Russia, and the Baltic nations. Other major businesses include 80%-owned shipping company Navion and petrochemicals business Borealis, a 50-50 joint venture with Neste Chemicals (now a unit of Sweden's Industri Kapital). Statoil also supplies electricity in Norway and Sweden.

Statoil owns the world's largest offshore gas platform, the Aasgard B off Norway's west coast. Cost overruns of the Aasgard field toppled most of Statoil's management in 1999. Now headed by former Postbanken chief Olav Fjell, the company is gearing up for growth by reorganizing into four main segments and divesting up to 20% of its assets. Political opposition has delayed Statoil's plans for a possible merger with SDFI and a partial privatization of the company.

History
To exert greater control over exploration and production of the Norwegian continental shelf (NCS), Norway set up state-owned oil company Den norske stats oljeselskap (Statoil) in 1972.

A decade earlier three geologists had visited Norway on behalf of Phillips Petroleum to apply for sole rights to explore on the NCS. The government initially refused drilling rights to foreign companies, and in 1963 Norway claimed sovereignty over the NCS. Two years later the government began allowing exploration. Phillips' major discovery in the Ekofisk field in 1969 prompted Norway to set up its own oil company. After Statoil's formation in 1972, the company garnered funds to expand through taxation of multinationals, production limits, leasing contracts, and other measures.

In 1974 a giant discovery was made in the North Sea's Statfjord field, and Statoil was given a 50% stake. A year later Statoil began exploring for oil and gas, exporting oil, and commissioning its first subsea oil pipeline, the Norpipe, which extended to the UK. In 1986 Statoil's gas pipeline system, the Statpipe, began transporting gas from the North Sea to the mainland.

Moving into retailing, Statoil acquired Esso's service stations and other downstream operations in Sweden and Denmark in 1985 and 1986. The next year, cost overruns stemming from the extension of Statoil's Mongstad oil refinery led to the ousting of the company's first president, Arve Johnsen, and many of his deputies. Harald Norvik was appointed CEO in 1988.

In 1990 Statoil and BP teamed up to develop international operations, and in 1992 Statoil acquired BP's service stations in Ireland. Statoil and Neste Chemicals (now part of Industri Kapital) formed the Borealis petrochemicals group in 1994.

The company in 1995 acquired Aran Energy, moving into exploration offshore Ireland and the UK. Statoil brought its field projects in China and Azerbaijan onstream in 1997. That year Statoil spun off its shipping operations as Navion, partly owned by Norway's Rasmussen group. It also contracted with Kvaerner to build a giant offshore gas platform for Aasgard field in the Norwegian Sea.

The Aasgard field project resulted in cost overruns in 1999, again leading to a Statoil board shakeup and CEO resignation. Norvik, who had advocated partial privatization of Statoil, was replaced by Olav Fjell, former head of Norway's Postbanken. That year Statoil helped Norsk Hydro take over rival Saga in return for some of Saga's assets.

As part of a major restructuring in 2000, Statoil sold most assets of US unit Statoil Energy. Political opposition that year postponed Statoil's plans for partial privatization.

From Hoover's

Interestingly enough, Norway is the second largest exporter of oil in the world after Saudi Arabia, yet produces no electricity with oil. As of year 2000 99% of production is from hydro, which Statoil is also involved in.

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