A merger meant to be?
The StatoilHydro merger
In October 2007 the merger between Statoil and Hydro finally became a reality. At the time, the new company was represented in 40 countries and had 29,500 employees. The merger was concluded in record time—less than a year passed from the proposal being launched to StatoilHydro becoming a reality. Two strong and, in some ways, rather different cultures were to become one.
There were several arguments for the merger between Norway's two largest oil companies. It was primarily a matter of ability to compete on the international market. It was a waste of resources and rather pointless to have two Norwegian operators competing against each other in international competition for the same projects. The merger received strong support when realised, also because a stronger organisation would create a company that could develop the NCS further, increased value creation and increased activity. In retrospect, no other company has invested more resources on the Norwegian continental shelf than Statoil.
Looking outside Norway
A new era of international opportunities
The merger between Statoil and Norsk Hydro’s oil and gas division opened a new era of exciting international opportunities for the merged company and for the Norwegian oil & gas industry. By merging, we aimed to pursue more and larger exploration and development projects simultaneously than the companies could manage separately.
With the added financial capital, knowledge and experience, the company managed to increase the number of operatorships compared to partner operated assets and this trend of more operatorship will increase going forward.
Brazil is just one of the countries where Statoil and Hydro put their expertise acquired on the NCS to full use, on the Peregrino field.
We have developed other international positions like in Tanzania, East coast Canada, Gulf of Mexico, the US onshore, and Statoil was the first company to be able to find a development solution for the Mariner field, 250 km off Scotland’s coast.
From one to six fields in the north
We have had a presence in the north for over 40 years, and just before the merger came into force, we started production from the Snøhvit field in the Barents Sea. Although Snøhvit was a pioneer, and the first field development in the Barents Sea, it was the second field the merged company operated in the north.
Since 1997 we have operated the Norne field in the Norwegian Sea from Harstad. Since the merger, Statoil has been a driving force behind developments in the north. As partners, we have helped develop the Skarv and Goliat fields. Today we are on track to start production from the fifth field in the north, Aasta Hansteen, in 2018. At the same time, we are in the process of realising new opportunities in the north with our sixth project in the region, Johan Castberg.
Combining two technology driven crews
Merging two strong innovation cultures
Statoil and Hydro both had a strong culture of research and innovation prior to the merger. From the outset, the goal was to get 1 + 1 to make 3, by taking advantage of each other's experience and expertise to become an even stronger technology company.
By systematising big data, it has been possible to reduce the time it takes to update a reservoir model from anywhere between 1 and 3 years down to just a few days, using a system called Fast Model Update (FMU).
Another example of technological innovation is the installation on the seabed of an almost complete processing facility, and an important milestone was reached in 2015 when Åsgard Subsea Compression came online. This technology will be able to improve the recovery rate dramatically on many fields.
Hywind started out as a drawing on a piece of paper by two Hydro engineers. Today this idea is about to become a wind farm with six turbines off the coast of Scotland, realized by Statoil. An example of collaboration.
A more robust company on the NCS
Many projects, great investments, technological advances, significant drop in oil price, efficiency, cost cutting and improvements has in different ways characterised the Norwegian Continental Shelf for the last ten years. It has been challenging but necessary in order to strengthen and increase competitiveness.
The sea (ocean) is and will remain Norway’s most important arena for value creation, and oil and gas from the NCS will continue to be very important in order for a growing world to reach both its energy and climate targets. The NCS is characterized by innovative solutions, high competence and technological developments. The solutions developed on the NCS are contributing to advance this global industry forward. We can continue to do so within climate and energy for decades ahead, and we want to continue this journey.
Explore for more
- continued search to meet the world’s energy needs
Since the merger with Norsk Hydro, the Statoil organisation has unified its exploration strength in one organisation. With a seat at the CEC table and a stronger organisation, Statoil has become one of the world’s leading exploration companies.
There has been notable exploration success: Discovering Pão de Açúcar (Brazil), Bay du Nord (Canada) and significant gas volumes in Tanzania prove that Statoil is an explorer second to none outside of the Norwegian Continental Shelf. On the NCS, the world class discoveries of Johan Sverdrup and Johan Castberg has given the shelf a future far beyond what many imagined.
Exploration is not only big discoveries. On the NCS, we have systematically worked to prolong and maximise income from and the life of installations through near-field exploration. This has given a longer commercial life through significant and valuable volumes.
Thinking outside the box
- how we develop new energy solutions
In many ways, the activity in Hydro laid the foundation for the focus on offshore wind farming. Alongside expertise in oil and gas and experience from marine operations, Statoil now has a strong position in renewable energy and offshore wind.
The company has already gained a firm foothold with its three wind farms Sheringham Shoal, Dudgeon and Hywind Scotland. At the same time, work is now under way on the Dogger Bank offshore wind project, which together with the three other wind farms has the potential to supply five million British homes with energy. The Arkona wind farm off the coast of Germany will come online in two years' time, and we have also secured an attractive offshore wind farm licence outside New York.
In October 2017 the turbines at the world's first floating wind farm, Hywind, will start turning. Conventional wind turbines had to be sea bed mounted meaning wind farms could only be developed in shallow waters. The new technology opens a wealth of new opportunities for the production of renewable energy in deep waters. Things are developing rapidly, and new sources of energy have the potential to account for 15–20% of Statoil's total investments by 2030
Giving back – our value creation
Taxes to Norway
Statoil has since the merger in 2007 paid taxes of almost NOK 1000 billion to the Norwegian State plus substantial amounts elsewhere in the world
Strongly outperformed oil price decline: Total shareholder return of 29% in a period when oil price declined 34%