Statoil Undergoing Big Changes Under New CEO

Eldar Saetre has been shaking up the leadership of Norway’s government-owned energy company since he took over as CEO three months ago, and doesn’t seem ready to stop. He has already ousted some top managers, including its chairman, and on May 12 he announced a series of new plans for executives.

One of these plans, and perhaps the most intriguing, is setting up New Energy Solutions (NES), a division that will focus on renewable energy – profitable renewable energy. The company said in a statement that the new unit will be led by Executive Vice President Irene Rummelhoff, who was previously the director of exploration in Norway.

In the statement, Saetre said he would make addressing climate change a top priority. So far the company’s focus has been on producing oil and gas, controlling more than 70 percent of Norway’s offshore drilling.

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Statoil already has wind-power projects, but the company said, “The ambition is to grow and potentially expand into other sources of renewable energy [to] seek new opportunities to deliver attractive returns through technology and business innovation, as well as venture activities.”

Statoil has five wind-power projects in the North Sea, yet its only commercial wind farm is Sheringham Shoal off the east coast of England and the company has invested in a second such project nearby. Still, it reduced its investment in both projects in 2014.

But that was before Saetre became CEO. Now, he said, he wants Statoil to increase its focus on the “transition of the global energy system to a low-carbon society.” He said the creation of NES “reflects the aspirations to gradually complement the oil and gas portfolio with profitable renewable energy and other low-carbon energy solutions.” As director of NES, Rummelhoff will report directly to Saetre.

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The company said it has only begun to outline a business plan for NES, but stressed that “[a]s a starting point the existing offshore wind portfolio will constitute our activities in the area.” But the statement said to expect the focus to widen to other sources of renewable energy that have “appropriate financial structures,” meaning they must be profitable as well.

These changes at Statoil aren’t sudden. They began in February when Saetre was promoted to CEO, replacing Helge Lund, who moved out to become the CEO of the British energy company BG Group. Since then Saetre has instituted many changes in the company, most involving efficiencies and cost savings. He’s even reported to have improved Statoil’s relations with trade unions.

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As part of the shakeup announced May 12, Saetre promoted Hans Jacob Hegge to replace Torgrim Reitan as chief financial officer. Reitan was named the director of Statoil’s US operations, replacing Bill Maloney, whose contract was not renewed.

Part of Statoil’s recent cost savings have included a write-down and a reduction in investments in US shale production, but Reitan’s appointment appears to show that the company may be looking for a fresh approach to conducting business in America.

One analyst, Christian Yggeseth of the Norwegian firm Arctic Securities, told Reuters, “[t]ransferring CFO Torgrim Reitan to North America shows that they will not put less weight on their North America division, and they might consider a different model of ownership.”

By Andy Tully of Oilprice.com

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