About Petoro

Petoro is a state-owned limited company which manages the SDFI in the Norwegian oil and gas sector. These holdings comprise a third of Norway’s oil and gas reserves and associated facilities. Petoro’s formal role as the licensee acting on behalf of the state is described in this two-minute film. Animation on Petoro

Foundation of the SDFI and Petoro

The basis for Petoro was laid in 1985, when the SDFI was established. This continued to be managed by Statoil until 2001. Following partial privatisation of the latter, responsibility for the SDFI was transferred to a new state-owned management company, Petoro AS, which was founded on 9 May 2001.
Petoro’s history began in many respects with the creation of the SDFI as part of “clipping Statoil’s wings” in 1984-85. However, it was founded as a company in 2001 when the partial privatisation of Statoil in that year made a new management system for the SDFI necessary.
Kåre Willloch
Kåre Willloch
Statoil’s rapid growth, which was giving it a dominant position in Norway’s oil sector and in the Norwegian economy generally, was hotly debated in the early 1980s. At the same time, the Conservative government under Kåre Willoch worried about the risk inherent in a relatively young company managing a very large part of the government’s revenues.

Under a broad compromise negotiated between the government and the opposition Labour Party, it was resolved to transfer roughly half of Statoil’s licence holdings to the SDFI. As part of the settlement, Statoil nevertheless retained the whole of its big interest in Statfjord and large holdings in Gullfaks and other important fields.
     
Since Norway’s public administration is not organised to pursue commercial activities on the scale required by the SDFI, the Ministry of Petroleum and Energy asked Statoil to act as the manager for this arrangement. That system persisted until Statoil was partially privatised in 2001. During that period, the SDFI had a low profile. What the partners, the market and the public saw was Statoil. The management system involved that company selling the government’s oil and gas together with its own production. This part of the arrangement has also continued since Petoro was created.
Along with this decision, the Storting adopted a revised arrangement for managing the SDFI. Various options were considered, and the choice fell on a new state-owned management company. Pursuant to an additional chapter 11 inserted in the Petroleum Act, this enterprise would act as the licensee for the state’s participatory interests.
Tore Sandvold
Tore Sandvold
A vigorous debate followed the announcement by Statoil chief executive Harald Norvik in January 1999 that he intended to seek a partial privatisation of the company. This was particularly heated in the Labour Party, where a number of its former key politicians warned against “selling the family silver”. But the privatisation proposal won the day, and was approved by the Storting on 26 April 2001.
     
Its mandate was to achieve the highest possible financial value for the SDFI on the basis of sound business principles. (Go to mandate for more information on the company’s creation.)

Petoro was accordingly founded and entered in the Norwegian Registry of Business Enterprises on 9 May 2001. Its first chair was Tore I Sandvold, who left his post as head of the petroleum department at the Ministry of Petroleum and Energy to build up the company. Kjell Pedersen came on board in September as president and CEO, with a management team established and key posts filled during the autumn/winter.

Although Petoro was given a commercial mandate, the Storting imposed certain restrictions on its operations. The company was, for example, not to act as an operator and its staffing was restricted to 60 people. The latter provision was repealed following the merger between Statoil and Norsk Hydro’s oil and energy division in 2007. That was because the loss of one of the two big Norwegian operators meant Petoro would have to do more technical and commercial work on its own account. Otherwise, the first 50 or so employees came from 34 different enterprises ­– including virtually all the big oil companies on the NCS.
Kjell Pedersen
Kjell Pedersen, chief executive from 2001-13.

At the same time as Petoro was founded, the size of the SDFI was reduced by selling 15 per cent of its assets to Statoil and 6.5 per cent to Hydro and other companies. That was the main reason for a NOK 18.4 billion reduction in its operating revenues from 2000, to NOK 125.6 billion. Cash flow from operations in 2001 was NOK 108.3 billion.
   
Important issues in which Petoro was involved during its first year included the decisions to develop the Snøhvit and Kristin fields, as well as work on Ormen Lange and further development of Troll. The company manages a 56 per cent holding in Troll – by far the most valuable asset in the SDFI portfolio.