While state-controlled Statoil struggles with much weaker financial results, environmentalists may at least be cheered by the gloomy news coming out of the company. Low oil prices and sagging profits mean the company is cutting back on oil exploration and investing more in alternative energy.
The company announced a sharp fall in third-quarter profits on Thursday as it faced highly critical questions over its cost-cutting programs. Statoil CEO Eldar Sætre confirmed that the company won’t be doing as much drilling for oil next year. The company had already announced this week that it was cancelling, for example, its contract with Stena Drilling for the mobile rig Stena Don.
The rig had been on charter to Statoil since February 2014, just before oil and gas prices began to dive. It was “performing operations for the Troll and Fram licenses,” Statoil reported, and its contract was to run until Februay 7, 2017. Now it will be cancelled after “plugging activity” on the Troll field is completed in early November. There’s no work for the drilling rig on the Fram field, Statoil said, “nor does Statoil have any other activiteis where the available capacity can be used.”
Tapping into tradewinds and sunshine
Meanwhile, Statoil has been investing in wind power projects and has even set its sights on Hawaii, abour as far from its Norwegian base as it can get. Pacific Business News, published in Honolulu, reported earlier this month that Statoil wants to develop a major wind energy project (external link) off the coast of Oahu, the most heavily populated island in the US state.
Now Statoil is also turning some attention to solar energy. Newspaper Dagens Næringsliv (DN) reported on Thursday that while its traditional sources of income from oil and gas sag, Statoil has, for the first time, decided to hire new employees to work on solar energy projects. It was advertising two positions within its business development sphere that concentrates on renewable energy.
“We have so far concentrated on offshore wind projects, carbon capture and storage,” Elin Isaksen, Statoil’s spokesperson for renewable energy, told DN. “But we’ve always been open that we also see solar power as an opportunity.”
While offshore wind power can make use of Statoil’s expertise in offshore installations, there’s little such synergy with solar projects, Isaksen conceded. “It’s interesting, but the market is relatively mature,” she said. It will be the new employees’ jobs to determine where and how Statoil might position itself.
Warnings of more losses
Analyst John Olaisen at ABG Sundal Collier was skeptical. While he thinks it’s fine for Statoil to explore possibilities, he cautioned against spreading itself too thin at a time of financial challenges.
“I think it’s much too early for Statoil to get heavily into renewables,” Olaisen told DN, simply because it could lose a lot of money for shareholders who include most Norwegians since the state remains Statoil’s largest shareholder with a 67 percent stake.
At the same time, Statoil is under constant criticism from climate- and environmental activists who want to see some oil fields shut down and a halt to more oil and gas exploration, especially in the Arctic. The company’s controversial investment in Canadian tar sands projects have also been blasted because of all the carbon emissions they create.