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Embracing the euro

October 12, 1998, 10:00 CEST

Contracts held by Statoil in European currencies will be converted to the new euro in January.

"We want to change as soon as possible to secure the savings offered by operating in one currency rather than 11," says Erik Bjelland, head of the group's euro project.

"At the moment, we're in touch with gas buyers and partners on converting our major gas contracts to euros."

While the exact size of the cost savings cannot be forecast in advance, he says they should amount to many millions of kroner per year.

Roughly half of Statoil's revenue derives from sales to European Union countries. As a first step, all contracts denominated in national currencies of the 11 members of the economic and monetary union (EMU) will be converted to euros.

The group is pursuing a dialogue with customers and suppliers on practical use of the euro, and amending its computer systems to handle the new currency. Euro systems are also being installed for financial and liquidity management.

Methanol was the first business area to conclude contracts in euros. This initial deal runs from 1 January, when the European currency is introduced.

While Statoil will continue to operate contracts with non-EMU countries in their existing national currency, it is positive in principle to converting these to euros as well.

Crude oil trading remains dominated by deals denominated in US dollars. The Norwegian krone remains the group's base currency, but the need for another to be used in parallel will be considered.