Norwegian oil firms'' merger to create world''s largest offshore operator

18 December 2006

Norwegian energy majors Statoil and its smaller, but older, rival Norsk Hydro have decided to merge their oil and gas operations, creating a global offshore world's largest offshore oil operator, with a total oil production capacity of 1.9-million barrels per day, and proven oil and natural gas reserves of 6.3 billion barrels.

In a joint statement, the companies said the merged operator would be "a highly competent and financially strong Norwegian-based energy champion. The recommended merger is driven by an ambition to grow in Norway and internationally."

Norway is the world's third-largest crude oil exporter and the merged entity would be able to compete more aggressively for foreign fields an extremely competitive area.

The Norwegian government, a key shareholder in both companies, would hold 67 per cent in the merged entity.

Though founded in 1972, decades after Norsk Hydro came into being in 1905, Statoil accounts for 60 per cent of Norwegian oil reserves. Its 2005 revenues were $63 billion (Rs281,547 crore) from global operations in 31 countries.

On the other hand, Norsk Hydro with 2005 revenues of $28 billion (Rs125,132 crore), is the world's third largest aluminium company and operates 13 oil and gas installations in Norway and has operations in 40 overseas countries.