Business | Oil & Gas
StatoilHydro backs out of Iran investments
StatoilHydro, the Norwegian national oil company, has become the latest big western energy group to commit not to invest in Iran, following pressure from the US.
- By Ed Crooks, Financial Times
- Published: 00:04 August 2, 2008
London: StatoilHydro, the Norwegian national oil company, has become the latest big western energy group to commit not to invest in Iran, following pressure from the US.
Statoil, which is 62.9 per cent owned by the Norwegian government, had been evaluating a big oil development in Iran but will announce that it "will not make any new investments in Iran at this time".
Statoil had been in talks over the development of the Azar field in the Anaran block in Iran, one of the bigger oil discoveries of recent years.
Helge Lund, Statoil's chief executive, said yesterday: "We have been evaluating our investment decisions and having informed the authorities in Norway and the European Union and discussed the issue with the US, our view is that this position is in the best interests of shareholders and the company."
Lund also said that the company would soon be reducing its involvement in the South Pars 6-8 gas project, transferring control to Iran's national oil company by early next year, after the project comes on stream.
Under the terms of the agreement with the Iranian government, Statoil has had a 37.5 per cent stake in the investment and construction phase of South Pars but no ownership of the gas produced.
The Norwegian company is paid as a service contractor. Its involvement in the project will end when it has recouped its costs, possibly in four years.
Statoil's decision follows similar statements by Total of France and Royal Dutch Shell.
Christophe de Margerie, chief executive of Total, told the Financial Times last month that the political risk of investing in Iran was too high.
Last month, the US state department announced that it would review Statoil's activities in Iran to determine if it was in breach of the Iran Sanctions Act, which prohibits investments of more than $20 million in the country's oil and gas sector.
The company has always kept the US administration informed of its activities in Iran, without suffering any retribution, but the political temperature has been raised in recent months.
The US is an important country for Statoil, which has ambitions to expand there, with increasing sales of liquefied natural gas and exploration in the Gulf of Mexico.
European oil companies have wanted to keep a foothold in Iran, which is rich in oil and gas, without jeopardising their relations with the US.
At the Oslo stock exchange, the StatoilHydro share price was down 3.50 per cent to 162.90 kroner in an overall market down by 1.79 per cent.
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