Posted on 12/18/2006 8:13:03 AM PST by Kurt_Hectic
Norway's two biggest companies want to form one of the biggest oil companies in the world, through a merger between Statoil and the oil and gas division of Norsk Hydro.
Both companies are heavily state-owned, and government officials are supporting the pending deal.
Statoil's young boss, Helge Lund, would become chief executive of the new oil giant, while Hydro chief executive Eivind Reiten would become chairman of the merged company.
Reiten would remain chief executive of Hydro Aluminium, which would also retain Hydro's operations within the hydro-electric and solar industries.
Lund called the merger "an historic milestone," adding that "the time is right" for one strong market player with its home base in Norway. The country currently is the world's third-largest oil exporter.
A merged Statoil-Hydro would have operations in 40 countries around the world and a combined staff of 31,000 people. It would also emerge as the world’s largest offshore oil firm.
A merger would leave Statoil's shareholders with 67 percent of the new company, while Hydro's shareholders would get 32 percent. The state would have a 62 percent stake in the merged firm.
Related stories: Prime Minister backs merger - 18.12.2006 Hydro shares skyrocket on Oslo stock exchange - 18.12.2006 Union doesn't fear job losses - 18.12.2006 Statoil and Hydro team on new North Sea investment - 15.12.2006 Government wants more shareholder control - 08.12.2006 Stoltenberg to meet Putin - 24.11.2006 Better than expected - 30.10.2006 Stocks up on rising oil prices - 20.10.2006 'Historic' new pipeline opens - 16.10.2006 Statoil accepts bribery fine - 13.10.2006 Government gives in to Statoil - 13.10.2006 Stockman partners dumped - 09.10.2006
Investors were delighted by the merger news, saying a combination of Statoil and Hydro's oil and gas division will give Norway one large and competitive oil company.
"It's a brilliant idea, and the timing, both industrially and politically, is very good," oil analyst Carl-Christian Bachke of Fondsfinans told business news web site E24. He noted that both companies have a lot to gain by teaming up off the coast of West Africa, in the Gulf of Mexico and off Norway's own northern coast.
Carnegie analyst John Olaisen was also keen on the merger plan. "Both firms will get rid of their biggest competitor in the fight for offshore production and exploration licenses," he told E24. "This will also make it easier for them to succeed internationally."
No doubt this is good news for these two companies trying to position themselves for a bite of the Shtokman-field in the russian sector, but the norwegian companies that deliver supplies to them will face a tough negotiation situation when there is just one big player left. Maybe this is not so good news for the norwegian maritime cluster after all.
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