Statoil's boss tells the oil industry its power is diminishing

The company is to be listed on the Oslo and New York stock exchanges when it is partly privatised in June.

Norway, which is the second biggest exporter of oil after Saudi Arabia, will sell a 15-25% stake in Statoil.

To make the shares attractive for investors, and in response to radical changes in the oil and gas markets, the state-owned giant had to restructure.

"Over the last decade, Statoil has increasingly been exposed to competition, not only abroad but also on the Norwegian shelf. Our position as a state owned oil company enjoying preferential treatment is long gone," president and chief executive Olav Fjell said on Monday in a speech to oil industry representatives at IP Week, the oil conference in London.

Much of the pressure for change came about after the oil industry's political clout started to wane.

"I think it is fair to say that the role of our industry used to be more important than it is today, politically, economically and even in the financial markets," Mr Fjell said.

"Energy was a critical input and oil price shocks used to shake the world economy".

A smaller company

Statoil's restructuring could be seen as a retrenchment.

By the end of this year, the company aims to have sold 24% of the assets it held when the restructuring started in 1998.

Statoil has a strong international presence

Costs should have come down by 20% and its workforce will be reduced by 10% during that period.

But this step back has been necessary since the aggressive growth strategy pursued by Statoil during the 1990s hurt the company's profitability and caused its financial performance to fall behind comparable companies, Mr Fjell conceded.

Return to growth

As soon as Statoil's retrenchment has made it a more profitable, albeit smaller, company, it will be time to pursue growth once again.

The company's Norwegian operations will remain its core business, but they will receive less investment in the future.

Olav Fjell talks shop at IP week

"On the Norwegian continental shelf, the peak years of investments are probably behind us," Mr Fjell said.

The company has a strong presence in the market for trading crude oil and other energy products.

This is because Statoil has been marketing vast volumes of oil and gas on behalf of the Norwegian State's Direct Financial Interests (SDFI), and as a consequence it is the third largest marketer of oil in the world.

Given that the oil company will acquire 15% of SDFI and continue to handle its marketing, this position should remain strong and provide a basis for growth.

Statoil is also strong in the European gas market, and this position should be strengthened as the UK's gas production flattens off, Mr Fjell said.

Statoil's international presence is another strength.

"Today, Statoil is involved in more than 20 countries worldwide. We explore in the Caspian, in the UK, in Venezuela and in Western Africa. And we market crude oil, oil products and natural gas in the US, in Asia, in the Baltics, in Poland and in most of the EU countries," said Mr Fjell.