Statoil ASA Essay

Custom Student Mr. Teacher ENG 1001-04 30 September 2016

Statoil ASA

Statoil ASA is a Norwegian Renewable Energy, Oil and Gas company, where the government of Norway is the main shareholder with 67 % of the shares. Statoil was established as a wholly state-owned company on 14th of July in 1972, and it was ranked as the 13th biggest Oil and Gas Company in the world by Fortune Magazine. Statoil is today a considerable international company, with 22.000 employees in 36 countries all over the world and it is Europe’s second largest natural gas supplier. The company manages the whole value chain from exploration and development of oil and gas fields to operations of production platforms and retailing of oil and gas products. Statoil merged with Norsk Hydro and gas division 1th October 2007, and was given the temporary name, “Statoil Hydro”. The company changed its name back to Statoil ASA on November 1, 2009.

PEST model:


The political environment in which a firm operates has a major impact on its operations and profitability, and is mainly influenced by the political forces in an industry or country. The political environment will have a large impact on Statoil’s opportunities for international growth and investment choices as it operates under demanding political conditions worldwide. These forces will especially determine its chances of getting access to resources and establish relationships with host governments and NOC’s (National Oil Company). Control over oil and gas fields are becoming increasingly political. This is due to the profits of such reserves is extremely high.

This means that each country want control over their own resources. For Statoil, which operates in 36 countries, this may mean that countries will nationalize their resources to domestic firms. Developing countries with unstable dictatorship or a history of sudden nationalization are examples of political risks may be obvious. Or more subtle that exists in countries that adjust foreign ownership rules to ensure that domestic companies have an interest.

Because the government has so much power and can change the laws, regulations and taxes can mean unpredictable changes for Statoil and the oil / gas industry. Due to the government’s high tax rate and fees in Norway, Statoil alone gave total approximately 19 ​​billion euros in 2011. Statoil has also helped to shape Norway into a modern industrial country. Today and for a long time the firm has been the most important player within the industry in Norway.

Liu Deschu, president and CEO of Sinochem Group, and Helge Lund, president and CEO of Statoil ASA, sign the Memorandum of Understanding in Oslo


The external economic environment, local and international level, has an extremely impact on Statoil’s activity in the market. Currency rates, raw material prices, interest- and inflations rates are examples of the most important economic forces that Statoil will influence. These factors will affect the profit potential of Statoil and estimate the potential size of the market. One of the major issues in the oil and gas market is the influence of the raw material prices. As with other markets, the prices of oil and gas fluctuate over time as a result of changes in the demand and supply. The current price has reached their highest levels since the late 80´s, resulting in a strong growth in the oil and gas market. One of the reasons seems to be a result of demand exceeds supply, with reason of political instability, energy substitutes, petroleum prices, industrialization, economic growth etc.

The increased demand from the emerging developing countries, such as China and India, is one of the reasons why demand is still increasing. More than 60 % of the increase in the world primary energy demand between 2000 – 2030 will come directly from developing countries especially in the growing Asia. This trend will probably continue, since the demand for transportation fuel is high, and a substitute for other sources of energy is not likely to be seen in the near future.

Supply of oil and gas fluctuates more than demand, and is mainly affected access to scarce resources, costs and (lac) of production, weather conditions, government policies and political risks. Even though that oil prices have been limited high in the past years, many oil companies have struggled with lower profit. Statoil has been lucky of having the North Sea as it biggest source of income, and the past two years, Statoil has found significant oil and gas fields in Barents Sea, North Sea, Peregrino (Brazil) and Zafarani and Lavani (Tanzania).


The most important social forces that can shape and change Statoil and the oil industry are the demographic changes, changes in lifestyle and distribution, knowledge of business countries and levels of education in a growing environment. The current changes in the demographics will face the oil business and Statoil. The business is young, so a big portion of employees will be retiring and replaced by the y-generation. Statoil is known as a very attractive company for the up and coming generation, and it is currently a war within the industry, and hopefully Statoil will be first in line.

There is an outermost growing demand for petroleum, oil and gas due to a constant growing population in the world and strong economic growth in the industrializing countries in the world. Understanding and managing social risk are extremely important for Statoil before they operate/do business in countries. To reduce harmful impact on the communities is one of the key factors in Statoil’s business method, and Statoil always operate through social responsibility plans. By making plans like this, Statoil builds a large knowledge platform of the local conditions, business culture, environmental and ethical risks and other external factors.


Statoil focuses a lot on how they can reduce CO2 emissions. Wind power is one of Statoil’s main areas to get a “greener” world. Off the coast of Norfolk, England, located offshore wind farm Sheringham Shoal. Statoil is also a member of the consortium” Forewind” who has the rights to develop offshore wind farms in the Dogger Bank beyond Yorkshire. Here, the total production would be able to cover 10% of all energy consumption in the UK. Statoil’s goal is to become an important supplier of sustainable biofuels production and trade with the world, and to be ahead in the retail markets.

Statoil started selling biofuels already in 1999, and today Sweden, Denmark, Norway, Estonia, Latvia, Lithuania and Poland all are selling biofuels at more than 1300 stations. Biofuels represent the greatest opportunity for reducing CO2 emissions from the transport sector in the near future. Biofuel can be easily integrated into existing infrastructure of the petroleum fuel, which makes the introduction of this fuel easier. The most common biofuels, ethanol and biodiesel can be blended into the existing fuel and used in existing vehicles.

Statoil sustainability principles for biofuels:|

We aim to be familiar with the origin of our biofuels and emphasize traceability through the whole production chain.

Our biofuels shall contribute significantly to greenhouse gas reductions compared to fossil fuels in a life cycle perspective.

We do not use feedstock from rain forests or other areas with high carbon stock.

We actively work to prevent damage to biodiversity, ecosystems and areas of high conservation value.

We emphasize protection of soil, water and air in all our activities

We aim to prevent displacement of food production important for sustainable livelihoods.

We aim to contribute to positive local development through agricultural competence building and job creation.

We support the protection of labour rights and human rights in accordance with the UN Global Compact Initiative, applicable ILO standards and the UN Declaration on Human rights. We follow relevant national legislation and work against corruption in all its forms, including extortion and bribery.

We contribute to develop new technologies for sustainable biofuel production.

We expect our suppliers and partners to follow our sustainability requirements. We audit their sustainability performance on a regular basis to ensure compliance and motivate improvements. |


Legal forces for Statoil refer to regulations and policies that the Norwegian government imposes, such as international laws and human rights. The oil industry is a highly lucrative business, but unfortunately there are still some incidents of violation of human rights. Statoil abide human rights to the fullest, and promote fundamental rights such as requirements of minimum wage, regulated work hours, prohibition of child and forced labor and the rights to organize and bargain collectively. In 2007, Statoil developed a tool for assessing human risks.

Norway and five other countries conducted a pilot project that is used as a tool to identify the risk for any form of violation on human rights. Statoil operates in many countries where aborigines live, Canada, Norway and Russia. A fair and constructive dialog is important of a good working relationship, and there have been no cases of assessing on aborigines rights. Environmental:

The main elements in the oil and gas industry are to reduce emissions of harmful greenhouse gas emissions and develop renewable energy sources. Increasing pressure to be environmentally friendly is and will be a focus area in all industries and sectors. For Statoil, this would mean that they must constantly look for new methods in technology to protect the environment around us. Some of Statoil’s efforts are mentioned under the “t” in PEST but Statoil have also a project called “Snøhvit” The Snøhvit(which means White snow as in 100% clean) field in the Barents Sea supplies gas to the world’s first LNG (liquefied natural gas) plant with carbon capture and storage.

On the island of Melkøya near Hammerfest in Norway, an LNG production site has been built. Here will the natural gas be liquefied. After this process, ships will export the LNG at around -163 ºC to Europe and the USA. In this way approximately 700 000 tons of CO2 is stored per year. Statoil is operator for the Snøhvit project which came on stream in October 2007.


Statoil have businesses all over the world, and they are still growing. The demand for petroleum, energy, oil and gas will increase in the next century, much because of the strong economic growth in the industrializing countries. Statoil will continue expansion of their businesses, remain a good reputation and still be one of the leading companies in the oil and gas industry. The company would constantly seek new opportunities and methods to replace scarce resources like oil and gas, in new energy types and implement this in an environment that does not take damage from it. Renewable energy, such as wave energy and wind energy is an important priority for Statoil in the future. Offshore wind is an area experiencing strong market growth, in which Statoil can use its expertise as the world’s largest offshore operator.

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