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Norway edges closer to finalizing Statoil, SDFI sell down

The Norwegian cross-party parliament committee wrestling with the partial privatization of Statoil AS and sell down of the state's direct financial interest in the Norwegian Continental Shelf agreed to recommend that as much as a third of the state-owned energy company, and 21.5% of the SDFI, be put up for sale. Representatives from Norway's Conservatives, Christian People's Party, Liberals, and ruling Labour Party struck what was described as a "compromise" deal to recommend offering shares in Statoil to both retail and institutional investors on the Oslo and New York stock exchanges starting as early as June. The committee, whose proposals still require formal ratification by parliament likely on Apr. 26 also recommended the percentage of the SDFI to be offered up to Norsk Hydro AS and foreign oil and gas companies be increased to 6.5% from 5%. Statoil will be sold the remaining 15%. A Statoil spokeswoman said the deal though falling far short of Statoil Chief Executive Olav Fjell's initial vision of a fully-privatized company with "caretaker" control of the SDFI would allow the oil and gas company the "full commercial freedom" it needed to become more competitive internationally. She noted that the committee's recommendation did not preclude the sale by the state of further tranches of Statoil shares in the future, but did specify that the company keep its headquarters in Norway. Hydro spokesman Tor Steinum said that the company saw "a number of positive suggestions" in the recommendations, but remained concerned the higher percentage of the SDFI being made available to Hydro and foreign operators still meant "a lack of balance for growth potential" for oil companies on the NCS. He said Hydro interpreted the 1.5% larger slice of SDFI being put up for sale as an "encouragement" to the company. However, he felt it did not offset what Hydro called the government's "inequitable treatment of Statoil and Hydro" when the White Paper on the selldown was published last December. Steinum said Hydro was looking forward to the possibility that the government might put up further tranches of the SDFI for offer at a later date. The 78.5% of the state's SDFI portfolio not sold straight off will be entrusted to a new state-owned limited company targeting "value creation" by managing the assets "at the account and risk of the state" with costs and revenues channeled through the government's budget. Other recommendations confirmed yesterday included a plan for an independently managed gas transport network based on a "common ownwership structure" amongst NCS operators. The model, in which the state would have a 51% holding, is aimed at bringing Norway, a European Economic Area member, into line with the European Union directive on deregulation of the continental gas market. The committee also called for greater streamlining of current asset ownership arrangements on NCS where, generally, a large number of partners share out very small percentage stakes in order to speed up the decision making process, while clearing the way for the development of more marginal fields.