Norway Proposes Partial Statoil Sale

By Doug Mellgren, Associated Press, Thursday 14 December 2000, 14 2:35 PM ET

OSLO, Norway (AP)—The government proposed a sweeping change in oil policy Thursday with a plan to reduce the state's stake in oil fields and privatize as much as 25 percent of the state-owned oil company Statoil ASA.

The world's second-largest oil exporter, behind Saudi Arabia, controls most of the vast petroleum reserves off its west coast through State's Direct Financial Interest, or SDFI, and through Statoil.

The government on Thursday proposed to sell 10 to 25 percent of Statoil to private investors. It also proposed to sell 20 percent of SDFI assets, which Statoil and Norsk Hydro ASA, in which the state holds a 44-percent stake, want to buy, as do other Norwegian companies.

The goal for this is to secure an even better management of our oil resources, said Prime Minister Jens Stoltenberg. We especially believe that it can strengthen Statoil because the concern will get both the opportunity to gain private capital and new owners and will, like (Norsk) Hydro, have the chance to buy SDFI shares.

Statoil has strongly supported partial privatization, and has pushed for a large share of the SDFI, believed to be worth more than 600 billion kroner ($65 billion) depending in oil prices.

The plan requires approval in parliament, where a majority is reported to favor the general idea. The government plans to present a bill to lawmakers on Friday.

A news release said a larger stake of Statoil could eventually be sold, but total private ownership would not exceed 33 percent.

Statoil was founded in 1972. In 1985, the government formed the SDFI due to widespread concern that Statoil was becoming too powerful.

The idea of selling stakes in the oil fields or shares in Statoil has split the ruling Labor party. Opponents say that's like giving away the nation's crown jewels.

Nevertheless, the party agreed just over a month ago at its national congress to go ahead with the proposal.

Norway produces about 3.2 million barrels of oil per day. Under SDFI, the government invests directly in oil field projects and then reaps its share of the profits along the same lines as do other investors.