Norway’s mostly state-owned oil company Statoil rejected three proposals from other shareholders for greener, more ethical operations, ahead of its annual general meeting in Stavanger on Wednesday. Controversial issues that shareholders wanted reviewed included oil sands mining in Canada, exploration in the Arctic, and projects and investments in countries known for corruption and dictatorship.
The Norwegian government owns a 67 percent share in Statoil, which was fined several years ago for corruption tied to its activity in Iran, but is not represented on the board. The state thus plays a largely passive role in Statoil’s affairs and Guttorm Grundt, a former environmental officer for the City of Oslo and a member of the Grandparents’ Climate Action (Besteforeldrenes klimaaksjon) group is among those unhappy about the lack of influence the government and taxpayers have over Statoil’s operations.
“We need a Norwegian oil and energy company, but someone must tell the other shareholders that this ethical platform of the company is not good enough,” Grundt told newspaper Dagsavisen. “Statoil has become a delinquent company that has gone in with some of the most corrupt dictators in the world, and is also involved in some of the most polluting projects, such as the oil sands in Canada. What Statoil should instead do is pursue a transition into renewable energy production.”
Grundt said it was unacceptable for Statoil to go against the Norwegian and United Nations climate change policies of emission reduction, particularly when the government holds such a large stake in the company. Statoil’s 2013 annual report predicted an increase in emissions, because of an increase in production growth and the maturation of some fields on the Norwegian continental shelf.
“A company where the state is the dominant owner shouldn’t work against the state’s official climate policy and the UNs climate policy,” said Grundt. “If Statoil harvests all sources it will significantly contribute to us not reaching the goal of global warming at a maximum of two degrees. This indiscriminate petroleum hunger by Statoil does not make sense. If Statoil continues to conduct itself as the company does now, the state should sell off its stake and end the special treatment Statoil enjoys.”
Grundt’s group proposed Statoil should sell its operations in Angola and Azerbaijan and reinvest the sales revenues in more research, development and production of renewable energy, both in Norway and internationally.
Statoil, however, referenced a government white paper from 2008-2009 to defend its involvement in dictatorships, saying it was the government’s view that Norwegian companies should also engage in counties where political norms and values differ, and where ethical challenges could be faced.
Proposals also came from Greenpeace and WWF Norway, which both own shares in Statoil. They said Arctic exploration must stop because of the financial and environmental risks associated with ice drilling. Their second proposal called for an end to oil sands extraction in Canada, saying it created very high emissions, great economic insecurity, local environmental risks and was a violation of indigenous constitutional rights.
“The world’s growing population and increasing standards of living in developing countries will drive a growing energy demand,” the board retorted. It noted an estimated one-fifth of the world’s undiscovered recoverable oil and gas resources lie north of the Arctic Circle, while the Canadian oil sands are the third-largest oil reserves in the world. Regarding oil sands extraction, the board said “Statoil is committed to complying with sustainability standards.”
Politicians remain passive
Oil sands extraction is unpopular with most Norwegian politicians, but the government voiced no objections prior to the general assembly’s sixth vote on the controversial practice, reported Norwegian Broadcasting (NRK). There will be no major changes to Statoil’s oil sands program as long as the state continues to accept the board’s recommendations. Just 0.46 percent of shareholders voted to end the tar sands project at last year’s meeting.
The Center Party’s (Senterpartiet, Sp) Geir Pollestad opposed the exploration, but said his party had never told Statoil what to do while it was in government. “We ruled for eight years, and we did not instruct the company then, I think we should stand firm on the decision that is is the board that decides what Statoil will do, and what they should not do.”
“The Norwegian ownership policy is based on the principle that business decisions should be taken by the board,” agreed Conservative (Høyre) energy and environment committee member Tina Bru. “It is they who have the expertise and not I or other politicians in Parliament. So I think it is more honest to argue that the state should not own a share of Statoil at all, if you don’t agree with the decisions made.”
Political opposition against oil sands mining has grown, however. The Christian Democrats (Kristelig Folkepartiet, KrF), the Greens (Miljøpartiet de grønne) and the Liberals (Venstre) have all put proposals before parliament to pull Statoil out of tar sands projects. The Socialist Left party (Sosialistisk Venstreparti, SV) has indicated it would support such a move, and now the Labour Party (Arbeiderpartiet, Ap) in “oil county” Rogaland said it also wants Statoil to withdraw.
“I believe the state should use the expertise and duty they have to instruct Statoil here,” Beate Sjåfjell, a professor of corporate law at the University of Oslo told NRK. “It is an untenable situation we have had for some years now, where the state is the main shareholder in such a large and important company, but won’t take the responsibility that goes with it. If you won’t take that responsibility, or dare not, then you must either accept the consequences of that and sell out.”
Environment Directorate review
Meanwhile, the Environment Directorate (Miljødirektorate) announced on Wednesday it would launch its own investigation into an incident at Statoil’s North Sea Statfjord B field last June, where a drop in pressure in an injection well caused nearly 1000 cubic metres of drilling chemicals to leak into the sea.
The agency’s director Ellen Hambro told newspaper Aftenposten it was not the first time Statoil had experienced a drop in pressure as an indicator of leakage, and she was concerned the company hadn’t reacted faster. “The Environment Directorate takes it seriously that Statoil did not have an adequate system to prevent leakage from the injection well on Statfjord B,” she said. “The company neither followed up on clear indications that something was wrong with further investigations. Therefore the the injection continued for several weeks despite the injected material leaking out to the sea floor.”
“We initiated further investigations immediately after we became aware of the leak and the well was closed,” said Ørjan Heradstveit from Statoil’s communications department. “The main explanation is that it was difficult to interpret the pressure data association with injection in this well. The pressure changed gradually over time, and the fact that low pressure can indicate leakage from the reservoir to the sea floor is a risk condition which had not received adequate attention.” He said Statoil had identified and implemented several measures to stop such leakage from happening again.