Libya probe mars StatoilHydro debut
Reuters
Published: October 02, 2007, 00:12
Oslo: Norwegian oil and gas major StatoilHydro made its debut yesterday, but its first day of trading was marred by a probe into the Libyan operations of assets it has just taken over.
StatoilHydro, the group created by Statoil's take-over of Norsk Hydro's oil and gas division, dropped as much as 1.4 per cent before recovering slightly to 182.25 crowns, down 0.8 per cent at 1029 GMT. The Oslo benchmark index was up 0.3 per cent.
Both StatoilHydro and Norsk Hydro said they would fully cooperate with the external inquiry into consultancy agreements and transactions with Libyan partners.
StatoilHydro said it was informed of the matter last week.
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"There's not much we can do about the timing of this. We will start an investigation," StatoilHydro Chief Financial Officer Eldar Saetre told reporters. "Both firms have strict ethical guidelines and high integrity."
A similar investigation into Statoil's dealings with Iran a few years ago led to the resignation of the Norwegian group's then chief executive and revamped transparency standards across Norwegian industry.
Hydro said the probe resulted from dealings between Saga Petroleum, an oil group which Hydro acquired in 1999, and Libyan partners. The assets in question are now owned by StatoilHydro.
Hydro Chief Executive and StatoilHydro Chairman Eivind Reiten said his company never benefited from any transfers.
"There is no reason today to say that there were bribes. We decided to pay (the consultancy fees) because we felt obliged by the deals made by Saga," Reiten said. "We have never drawn any benefits from those deals."
Details of the inquiry have not yet been made public.
Saga's portfolio in Libya consisted mainly of a 25 per cent stake in the Mabruk field and an 8 per cent stake in Murzuq.
Hydro said Saga had sought "access to a considerable exploration acreage as an operator" and made consultancy agreements in January 1999 with a commitment to pay more fees.
"When Hydro became aware of these commitments, Hydro chose to reject an offer to be granted these exploration rights - because Hydro could not ensure that the agreements were in compliance with Hydro's ethical guidelines."
"In conjunction with the termination of the agreements and the ensuing process aiming to sell the Libyan assets, Hydro in 2000 and 2001 honoured commitments made by Saga amounting to a total of $6.85 millions under these agreements."
Hydro said it was not successful at selling the assets, and, following a review, the Norwegian group "considered it realistic to continue the operations within Hydro's ethical guidelines".
"Working conditions in Libya have later improved and have given basis for increased activity. In 2006, Libya introduced a new and transparent licensing scheme in accordance with international guidelines," Norsk Hydro said.
Hydro also said it rejected two invoices, totalling $1.2 million, from the operator of the fields in the Murzuq basin because it "could not establish that a payment would be in accordance with Hydro's ethical guidelines".
Shares: Norwegian major slides
- StatoilHydro, the group created by Statoil's takeover of Norsk Hydro's oil and gas division, dropped as much as 1.4 per cent before recovering slightly to 182.25 crowns, down 0.8 per cent at 1029 GMT.
- Norsk Hydro's shares were 2.4 per cent higher at 77.85 crowns, compared with a pro-forma Friday close that excludes the value of its oil and gas assets sold to Statoil under a $36 billion deal announced last December.
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