StatoilHydro Shapes Up

StatoilHydro has come a long way in the process of becoming a single entity. Probably the most obvious indicator is the first word of the first sentence above – the “new” name for the “new” Norwegian oil and gas company. Following the lead of super major mergers such as ExxonMobil and ChevronTexaco, StatoilHydro has chosen to use CamelCase or BumpyCase – a medial capital – to create a name that melds its two parts, anticipating a sense of continuity. The implication is that nothing will be lost as the entities merge.

We’ve also been presented with the new corporate executive committee, made up of CEO Helge Lund and eight others who comprise the top echelon that is part of a total of 70 top leaders for the new company. As CEO Lund said during the leadership presentation to the press, the intent is to build a “new” corporate culture that is a hybrid of the two former entities. Yet 70 percent of this group are now Statoil managers.

Hydro’s business has always been more than oil and gas. The company – which not so long ago celebrated it’s 100th anniversary – spun off its fertilizer, gas and chemical business as Yara in 2004, and the aluminium business will remain as Hydro’s primary focus in the future. The future Hydro is presented as the reason that only about 30 percent of the StatoilHydro managers originated from the company.

The integration committee intends to form a new hybrid corporate culture, but because Statoil managers make up a 70 percent majority of the top leadership, maintaining the blend may be a challenge.

Once merged, StatoilHydro will account for approximately 80 percent of the operatorships on the Norwegian Continental Shelf (NCS). According to the authorities, this percentage will be reduced over time. But it’s not just operatorships – StatoilHydro will dominate the NCS.

But, it’s good to remember that because both Hydro and/or Statoil are involved in nearly every field on the NCS, once merged, the total percentage of involvement will be more than significant. Add to this the state’s direct economic involvement – Petoro – and the state’s cut of the NCS oil and gas activities is staggering – and that’s before taxes are collected. Moreover, the state plans to raise its percentage of StatoilHydro ownership from 62 to 67 percent.

We’ve also been told that the new StatoilHydro will be able to leverage its worldwide assets and expertise to hold its own when entering new, emerging regions. This will secure the company’s as well as the state’s future oil and gas profits as NCS output declines.

But some are concerned about the affect on the NCS itself. Will the new StatoilHydro be as favourable to the supply industry as Statoil and Hydro have independently been in the past? Will StatoilHydro research efforts be as great as the separate efforts of the two entities? How much redundancy can the new company tolerate?

In the coming months we hope to hear more from the StatoilHydro integration committee to address these concerns.

The corporate executive committee of the new StatoilHydro – from left: Peter Mellbye, Rune Bjørnson, Tore Torvund, Jon Arnt Jacobsen, Hilde Merete Aasheim , Helge Lund, Margareth Øvrum, Morten Ruud and Eldar Sætre (Photo: Harald Pettersen, courtesy Statoil)