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Monday, July 15, 2024

Equinor cost cuts tied to safety issues

The new CEO at troubled state oil company Equinor has conceded that the cost-cutting program he led during the last oil crisis may have weakened safety at some company facilities. Now the state is also toughening up on some of Equinor’s accounting and reporting procedures.

There seems to be no end to the criticism directed at Equinor, Norway’s largest company. The company has previously claimed there’s been no direct connection between its cost-cutting programs and a recent string of accidents and critical reports from regulators over poor maintenance and a lack of adequate follow-up. Now CEO Anders Opedal has admitted that “if we don’t carry out improvements and cost-cutting in a good manner, it can be among the reasons we have incidents.” Those “incidents” have included a major fire at its Hammerfest LNG plant on Melkøya and oil leaks at its Mongstad refinery.

Opedal, who was in charge of much of the cost-cutting at Equinor before becoming CEO, now says the company’s management is “humble and listening” to criticism from regulators and analysts “that there can be situations where we haven’t always been good enough. We must learn from that and correct it.” He specifically mentioned Melkøya at a press conference last week, as an example of an “incident” that should not happen again.

Analysts and the Oil Ministry, which still holds a 67 percent stake in Equinor, are also complaining about new accounting practice tied to the company’s renewable energy projects. They’re concerned Equinor is blending one-time gains with operating results, which could be misleading. The ministry, which has been criticized itself for failing to monitor Equinor closely enough, now intends to question Equinor over the practice at its next meeting with management. staff



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