MercoPress. South Atlantic News Agency

Norway creates world's largest offshore oil company

Norway's leading hydrocarbons' company Statoil ASA announced Monday the acquisition of Hydro oil and gas ASA creating the world's largest offshore operator. The new company will have a combined production of 1.9 million barrels per day in 2007 and proven oil and gas reserves of 6.3 billion barrels of oil equivalents.

"Both Hydro and Statoil have developed competence and technologies acknowledged to be among the best in the global energy industry. By combining forces, the new company will be a highly competent and financially strong Norwegian-based energy champion, well positioned to ensure continued domestic excellence and pursue international business opportunities for long-term growth" said Jan ReinÃÂ¥s and Jannik Lindbæk, Chairmen of the Board of Directors of Hydro and Statoil, respectively, in a joint statement. "The industry faces an increasingly challenging international landscape. To merge now makes perfect sense." The proposed merger also garnered support from the Norwegian government. Prime Minister Jens Stoltenberg said that "the new company will create huge values for Norway. And the merger is an excellent foundation for meeting the challenges facing the oil and gas industry. The government sees the recommended merger as industrially and strategically well founded." "This is the start of a new era. We are creating a global energy company and strengthening Norway's oil and gas industry" he added. Statoil is currently the main offshore hydrocarbons producer which turned Norway into the world's third largest oil exporter and Norsk Hydro is also involved in oil and gas activities. The new company, still unnamed, with assets estimated in 91 billion US dollars is set to overtake Royal Dutch Shell PLC as the world's leading offshore oil producer. "The merger ensures long-term value creation for shareholders, continued development of competence and innovation and a further strengthening of Norway's role as a globally leading energy supplier" said Eivind Reiten, who remains President and Chief Executive Officer of Hydro, a focused global aluminum company well positioned for long-term growth. "This is a historic milestone. The time is right for one strong Norwegian-based energy champion. We are creating a stronger and more competitive company. Combining the best of both organizations, we will significantly improve our competitive position internationally and promote long-term vitality of the Norwegian Continental Shelf," said Helge Lund, President and CEO of Statoil. Following the transaction, the new company will employ 31,000 people in forty different countries, of which about 5,000 from Hydro's Oil & Energy business area, Hydro IS Partner and other personnel supporting Hydro's current oil and gas activities. When the deal is confirmed by the two companies and regulatory authorities, Hydro shareholders will hold a 32.7% stake in the new company while Statoil shareholders will maintain the remaining 67.3%. Norsk Hydro said it will continue as a global aluminum company after Statoil acquires its energy assets. The state of Norway will acquire 62.5% of the new company following the merger with eventual plans to increase their stake to 67%. Completion of the deal valued in 30 billion US dollars is expected to occur during the third quarter of next year and the new company is set to become the world's largest offshore oil producer