BP Plc, which operates in Norway, agreed to a US$1.3 billion merger with its Norwegian counterpart Det Norske Oljeselskap, in a move slated to cut costs and challenge Statoil’s dominance of the Nordic country’s energy industry.
The newly merged company, to be called Aker BP, will produce over 10 percent of the nation’s oil output – still well below Statoil’s 60 percent market share.
Aker, an investment vehicle that holds a majority stake in Det Norske, will own 40 percent of the new company, BP will hold 30 percent and other shareholders will have claim to the remaining 30 percent.
This deal, in which Dek norske oljeselskap has agreed to buy BP’s local business, effectively creates what will be the largest independent producer by volume in Norway, and it will be controlled by Norwegian billionaire Kjell Inge Rokke.
Det norske will pay $140 million in cash to BP, along with the $1.3-billion 30-percent stake BP will have in the new company. The company will focus largely on oil assets.
“This is a milestone in Norway’s oil and gas history,” said Oyvind Eriksen, chairman of Det norske, as reported by the Financial Times.
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“I’m overwhelmed by the reception this deal has received, even from other oil companies on the Norwegian shelf. It is what this shelf needs, and it is in Norway’s interests as an oil-producing nation.”
Norway’s state-run Statoil currently produces some two-thirds of the country’s oil and gas, according to FT, and the emergence of this new company will create strong competition for the first time.
By Zainab Calcuttawala for Oilprice.com
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