Looking outside Norway
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.
At the time of the merger, there was a strong overlap of countries where both companies were involved or trying to get a foothold. By merging, StatoilHydro (name at that time) aimed to pursue more and larger exploration and development projects simultaneously than could manage separately. The merger allowed for a financial solidity and human capital which increased the company’s ability to compete internationally.
From partner to operator
With the added financial capital, knowledge and experience, the company managed to increase the number of operatorships compared to partner operated licenses. Gaining operatorships and building regional organizational hubs became part of the strategy in the year of the merger.
Both Statoil and Hydro had similar expertise in deepwater, harsh environments, heavy oil and gas value chains and aspired to exploit these capabilities across the world. Brazil is just one of the countries where Statoil and Hydro put their expertise acquired on the NCS to full use. The Peregrino field is a heavy-oil offshore development where complex new technologies such as Electric submersible pumps (ESPs) were used to increase the recovery factor. Similarly to Peregrino, Statoil was the first company to be able to find a development solution for the Mariner field, 250 km off Scotland’s coat, which also presents a highly viscous oil reservoir. In subsequent years, Statoil increased it’s ambition as an international operator, taking operator positions through license rounds, negotiations or acquisitions in several countries. By being an international operator Statoil has grown as a company and gained that expertise to establish itself as a key player - like in the newly defined core areas Brazil where the company is the operator for the Carcará oil discovery and the Pão de Açúcar gas and condensate discovery. Statoil is also the operator for the Bay du Nord oil discovery offshore Newfoundland, Canada and the high impact gas discovery offshore Tanzania
The US onshore and offshore play
Before the merger, Statoil and Norsk Hydro both had deepwater positions in the Gulf of Mexico that were obtained starting in 2005 through acquisitions of assets or US companies. Following the merger, the companies unified their interests in the Gulf of Mexico but also sought for opportunities for onshore unconventionals in the country, mainly shale gas. Statoil’s focus on unconventionals became a key strategic direction for the company. Statoil first entered by forming a strategic alliance with Chesapeake Energy Corporation and acquiring 32% interest of their Marcellus shale gas acreage. This acquisition was followed by others in the Eagle Ford shale gas formation and the Bakken oil formation in 2010 and 2011. In 2013, Statoil gained operatorship of the Eagle Ford assets.
By being an international operator Statoil has grown as a company and gained that expertise to establish itself as a key player
Over the past few years, the US onshore business has expanded and US onshore is also defined as a core area in Statoil’s updated strategy – being a key area for the future. Shale positions offer great opportunities in terms of flexibility, they can easily be shut down or ramped up. Having a strong presence in the US thus provides Statoil with flexibility, which is a key goal identified in Statoil’s sharpened corporate strategy.
Statoil has been through a true growth story in the last 15 years, rapidly increasing production from its international positions compared to the years before the merger. Most notably, following the merger, international production has grown at a much faster pace than the previous decade, reaching more than 700 mboe/d by the end of 2016. This production growth has been driven by the merger itself and a series of developments across the world in particular in Brazil, Angola and US. This growth rate would not have been possible without the shared competences, strengths and resources of both companies.
Following the merger, international production has grown at a much faster pace than the previous decade, reaching 740 mboe/d by the end of 2016.
Statoil’s portfolio and direction has not remained static over time. For instance, in 2007 Statoil decided to enter the Canadian unconventionals market, by acquiring North American Oil Sands Corporation and becoming operator of the Kai Kos Dehseh oil sands project. However, by the end of 2016, the company decided to divest completely from its oil sands business.
Brazil remains one of Statoil’s greatest accomplishments internationally. In 2008 Statoil became 100% operator and owner of the Peregrino field, paying USD 1.8 billion to Anadarko for 50% share. Later, in 2010 Statoil farmed down and sold a 40% share to Sinochem for USD 3.07 billion. The proceeds were used to position the company in new exciting opportunities. Among these were the Pão de Açúcar and Carcará discoveries, strengthening Statoil’s position in the country. Statoil is now the biggest operator in the country after Petrobras.
As with any growing company, Statoil’s international journey has also been dictated by several learning points and gaining experience. One such example is in Russia where Statoil originally invested in the Shtokman field in 2007 but later decided to write off its investment due to the partnerships failing to find a commercial solution for the development of the field. In 2013 Statoil signed a strategic cooperation agreement with Rosneft to advance several joint projects.
As of today every 5th Statoil employee has a nationality other than Norwegian: There are 87 different nationalities in the company today.
Statoil's experience from the international oil and gas positions is also being used as the business broadens its portfolio of renewable energy projects, so far building a presence in the UK, Germany and the US. Not only is Statoil's portfolio becoming more international but also its people. As of today every 5th Statoil employee has a nationality other than Norwegian: There are 87 different nationalities in the company today and building strong local organizations and developing a diverse pool of talents are priorities of Statoil. Norwegian employees are also exposed to international projects, in 2016 about 3700 employees (20% of our workforce in Norway) worked directly on international projects, either full or part time. Statoil's international journey will continue for many decades to come and Statoil will continue to turn natural resources into energy for people and progress for society across the world.