The Strategist

Statoil To Support Carbon Taxation While Arriving At Cost Reduction


04/25/2015 - 15:09



The C.E.O of Statoil, a giant Norwegian oil company, Mr. Eldar Saetre, talks about his aims of reducing carbon emissions. He is for the carbon taxations. Furthermore, he strives to combine cost reduction with that of decreased carbon emissions.



Thestrategist.com – 24 April 2015 – The Norwegian oil-company, Statoil, has appointed Eldar Saetre in the post of C.E.O, who has been the former C.F.O of the company besides being a veteran for thirty five years. Given these experiential backgrounds, the fifty nine year old Saetre, had little trouble in taken up the responsibilities of C.E.O which was vacated by Helge Lund. Lund resigned the post to resume the same in the company of “BG Group”.
 
Saetre informs Forbes that at present he has turned his focus “on cutting costs, maintaining flexibility and taxing carbon”. As per him, tackling the issue of cutting down costs is no difficult job; furthermore, within ten years time the “subsea development costs” have come up by 250%, whereby there is an attempt of “increased standardization”. The company of Statoil is likely “to match the improvements gleaned in shale plays like the Eagle Ford” as Saetre’s presence has reduced the duration of drilling a well from fifty two to twelve days.
 
Moreover, Saetre’s goal of reduction of carbon emissions to make Statoil “the world’s most carbon-efficient oil company “, especially coming directly from an oil-company is a “surprising” ambition, whereby Statoil stands apart from “its American oil giant peers”.  Christopher Helman, a staff member of Forbes, writes:
“You simply won’t hear an American oil CEO say, as Saetre told me, that oil companies need to support United Nations’ efforts to impose a global cost on carbon.”
 
As a matter of fact, the government of Norway along with Statoil and “other oil giants”, though “a handful” in number, including “Total” from France, Eni from Italy, and U.S. based “Shell”, signed “a landmark World Bank pact” whereby they will strive to end the burning of “natural gas by 2030”. Consequently, there may seem to be a jumble of contradictions with an oil-company that strives to promote “carbon controls”.
 
Nevertheless, Saetre’s messages seem to clarify the doubts. Staoil is firstly dealing with cost issue as “growing cost level within the industry is not consistent with the commodity price environment” adding a certain amount of risk, uncertainty and volatility. Saetre proposes to tackle the satiation:
“...through standardization, simplification and specialization.”
 
Secondly, Statoil is looking into carbon reduction possibilities as oil-industry is increasingly “coming under” pressure of diminishing carbon footprints. Saetre says that the industries need to recognize the importance of this global issue, instead of getting defensive. Thus, as per him there needs to be a certain steps towards changing of this mindset, only then solutions can be arrived at. In fact, he points out that oil and gas companies need to think in terms of “operations and emissions and energy efficiency” so as to contribute to the global effort of carbon issue, whereby the U.N. has assigned a “cost on carbon” and Saetre supports the carbon taxations.
 
In Eldar Saetre’s words:
“The world is going to need 40-50 percent more energy even if you account for 40-50 percent more energy efficiency. It’s a fact that the population is growing; more and more people would like to have access to energy... Whatever kind of assumptions you put in place on energy efficiency and renewables, you will still need oil and gas. It means that oil and gas has to be produced... And that’s why the costs associated with it are important. You would prefer low cost barrels because there will be additional carbon costs placed on this. With all the regulations and emissions costs you need a very cost efficient starting point.”
 
Therefore, Saetre proposes that sustainable and long lasting changes should be embraced as “businesses must adapt to it (increased regulations on carbon emissions) in a rational, cost-effective manner”. Furthermore, Statoil has struck a partnership “with General Electric GE -1.48% for ‘CNG in a box’”, whereby the company captures and compresses “the gas” to use it as truck fuels, which would, in fact, reduce the consumption of diesel by fifty percent. Moreover, Statoil is also “using liquefied carbon dioxide for fracking instead of water”, for as Saetre would put it:
“You have to have an ambition to do something, and not just talk about it.”