'The Norwegian oil & gas industry has been crying wolf all too much. This has led to a serious image problem,' says Oil Minister Olav Akselsen.
He would rather spend his time as match-maker for Statoil than listening to any more futile complaints about the fiscal terms in Norway.
Recruitment problems and Statoil's upcoming Initial Public Offering (IPO)'s Road Show are only two reasons why Akselsen want the industry to stop whining. The Ministry of Oil and Energy is working hard to get a new energy policy through the parliament.
Olav Akselsen wants to avoid making the whole oil policy into a discussion on the sale of the State's Direct Financial Interests (SDFI).
'We should keep a broad view, bearing in mind the partial sale of SDFI is only one, although significant, part of a whole new policy.
Tighter Licensing Periods: Another aspects of the new oil management is pre-qualification. ‘Gaz de France is one company which has previously been turned down by the Ministry, but has now been pre-qualified for participation on the Norwegian Continental Shelf (NCS),’ Akselsen says.
Gaz de France was recently welcomed to buy some of Statoil’s shares in the Snow White field. One reason to invite more companies onto the NCS is to get the marginal projects out of their Sleeping Beauty condition.
It is doubtful if anyone will bother with them a hundred years after the project papers fell asleep inside a planning office drawer.
With new technology available, now is the time to make these projects work. A new practise, with tighter licensing periods, has therefore been signalled from the Ministry of Oil and Energy.
Akselsen wants to put pressure on the companies to either explore the acreage they have been allocated or transfer it to another company.
The Ministry has looked with concerned eyes on a number of licenses where virtually no exploration has taken place, years after licenses have been awarded.
This is good news for smaller companies looking for opportunities on the NCS. However, no decision has been made for shorter periods for the North Sea licensing round later this month.
Today, licenses are usually awarded for an initial period of six years. In addition it has been easy to get up to four years extension.
Another aspect of the new oil policy is the regularity in licensing rounds. ‘There will be a new round every year in the North Sea, and every second year in the Norwegian Sea,’ the Minister says.
‘This regularity is vital in creating a stable future for the industry in Norway.’ Steady jobs and steady revenues are at the heart of Akselsen’s policy.
‘It is important to avoid the extreme ups and downs. In the middle of a strong upswing, we can still feel the negative effects of the previous downturn, especially with regard to recruitment,’ he points out.
Seven-league Boots: ‘We are walking with seven-league boots in this restructuring process,’ Akselsen says. He is not primarily thinking of the speed, but of the major policy change it involves.
The privatisation part of the restructuring will be the most notable change, as it involves throwing away main principles of earlier policy.
Once decided it also seems to be the part where the government is in the most hurry. Although no one still know exactly how the transaction should be done.
‘We won’t advertise a sale in the newspapers,’ Akselsen smiles. Neither will he call it an auction nor a closed process.
A probable line of action seems to be that the Ministry and Statoil will select some strategic partners, and hope they will pay the demanded price.
IPO Road Show: Statoil will soon be going on a road show to market their IPO. When asked why investors should buy shares in Statoil instead of e.g. Enterprise or Conoco, Akselsen mentions the novelty of Statoil shares.
Realising that is not much of an argument, (as recently exemplified by Norwegian Telenor) he quickly moves on to the value of knowledge.
‘The people and the technology within Statoil are the main assets,’ he says. ‘And of course the extremely strong presence in such an attractive area as the Norwegian Continental Shelf (NCS)’.
Those are viable arguments for strategic investors. And in fact, the financial investors might not be all that important to Statoil, as the company is first of all looking for partners within the industry to help them grow abroad.
On the other hand, if financial investors are in the target group, they would like to hear political signals that more of Statoil will be sold at a later stage. Such an indication might affect the share price positively.
However, the Minister’s prime concern is to create a broad political unity for the process, and he is therefore very careful not to voice any such desires at this stage.
‘What is most important to me is to make sure we get a new system for the oil industry which is as strong and lasting as the previous arrangements, such as the SDFI, has been, Akselsen says.
No doubt he will be remembered much longer than 15 years, going down in the Norwegian oil history as the political advocate of privatisation. Despite the fact that he might not hold the chair for much more than a year.
Achieving a broad base is not least important because Akselsen will have to work very hard in order to manage the sell-off before the next general election.
His government, headed by former Oil Minister Jens Stoltenberg, has not won much popularity among the Norwegian people. Norwegians will be casting their votes in the autumn 2001.
Door Opener: Talking about the pros & cons of buying Statoil shares, Akselsen has to admit there are other oil companies, on the same size as Statoil, with a broader distribution of their portfolios.
‘Of course we would like to see a stronger international presence by Statoil,’ Akselsen admits. One achievement he would like to be able to be remembered by is to see Statoil expand and work as a door opener for Norwegian contractors abroad.
Statoil has recently announced that they are reviewing both upstream and downstream opportunities in several Latin American and the Middle Eastern countries as well as opportunities in Russia.
This announcement is, no doubt, an important part of appearing a bit more aggressive in front of their Road Show. But Statoil is obviously very eager to get a stronger foothold in the expanding new oil areas of the world.
Virtual Border: ‘The oil & gas industry has an image problem’, Akselsen admits. ’People think it is old-fashioned, boring, dirty, and worst of all; youth believe it is a sunset industry holding no future for them’.
Another problem, as Akselsen sees it, is that the introduction of virtual reality has created a virtual border between the old and the new industry. ‘This is a problem for all traditional industry,’ he says.
‘However, the fact is that much of the new information technology is developed within the oil & gas industry!’
‘Much of this image problem is created by the industry themselves’, the Minister points out. ‘They have been crying wolf all too much!’
‘The industry is complaining about the costs of taxes, safety regulations etc. on the NCS. But I can promise one thing, those costs are staying! They are vital to our welfare society. On the other hand, we offer reliable and fair conditions in an attractive oil & gas area,’ Akselsen concludes.
By: Åse P. Thirud
(scandoil)
© 2001 Mena Report (www.menareport.com)
