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Competitiveness needed

January 22, 1999, 07:00 CET

Norway needs a competitive offshore sector with strong international participants and Norwegian players who succeed in international energy markets.

This comment comes from Statoil chief executive Harald Norvik at a time when the structure of Norway's oil and gas industry is under pressure following widespread deregulation of markets.

The existing organisation of this sector dates from a time when oil prices were expected to be high and rising, and focused on maximising government revenues.

Other key objectives were a heavy public-sector role in the organisation of the gas business, and strong international participation on the Norwegian continental shelf.

New and competing petroleum provinces have now been opened to exploration by the world oil industry, the level of risk has increased and the competitive rules have changed completely.

State ownership ensures a long-term perspective and financial strength. However, owning one of the competitors in an industry subject to government licence presents difficulties when the owner is also the licensing authority.

And Statoil's present ownership model fails to provide the necessary incentives and continuous monitoring which other limited companies are given by the capital market.

"From a commercial perspective, the pace is changing as the industry undergoes a restructuring which demands that owners are able to take action," says Mr Norvik.

"At the same time, Statoil needs to become more adaptable and to be given more unambiguous roles and incentives in its commercial operations.

"The review we now need to undertake must aim to secure broad political support."

See related article:

Time for ownership review