Norwegian oil company acquires BP assets

British oil giant BP will merge its Norwegian assets with Det Norske, Norway's biggest independent oil company, in exchange for a minority stake of 10.8 billion kroner ($1.3 billion) in the new group, the two sides announced Friday.

Norwegian oil company acquires BP assets
Øyvind Eriksen, CEO of Aker, announces the deal. Photo: Scanpix

Named Aker BP, the new entity will hold 97 licenses on the Norwegian continental shelf, including 46 as the operator. It will produce around 122,000 barrels of oil equivalent per day, based on 2015 figures, with reserves estimated at 723 million barrels.

It will be 40-percent owned by Norwegian group Aker, the holding group that owns Det Norske, and 30-percent owned by BP. The remaining 30 percent will be held by Det Norske's other shareholders.

“With this transaction, we provide Det Norske with operational strength, a robust capital structure and two solid industrial owners, thereby creating a platform for further growth on the Norwegian continental shelf and near-term capacity to pay out quarterly dividend,” Kjell Inge Rokke, Aker's main owner, said in a statement.

In practice, Det Norske will issue 135.1 million new shares at 80 kroner apiece which will go to BP, which will in exchange turn over its Norwegian assets. Aker will then acquire 33.8 million of these shares.

BP will also receive a cash payment of $140 million.

Because of the weak oil price, oil companies have been trying to reduce their expenses and financial commitments while optimising their portfolios.

“The direct impact on BP will be less costs in the immediate term, less capital, (and) reduced headcount (BP has around 850 employees in Norway),” Bloomberg News quoted BP's upstream director Bernard Looney as saying.

In 2014, Det Norske acquired the Norwegian assets of US company Marathon Petroleum for $2.1 billion.


NGOs take Norway to European Court over Arctic oil exploration

Two NGOs and six young climate activists have decided to take Norway to the European Court of Human Rights (ECHR) to demand the cancellation of oil permits in the Arctic, Greenpeace announced on Tuesday.

NGOs take Norway to European Court over Arctic oil exploration
Northern Norway. Photo by Vidar Nordli-Mathisen on Unsplash.

It’s the latest turn in a legal tussle between environmental organisations Greenpeace and Young Friends of the Earth Norway on one side and the Norwegian state on the other.

The organisations are demanding the government cancel 10 oil exploration licenses in the Barents Sea awarded in 2016, arguing it was unconstitutional.

Referring to the Paris Agreement, which seeks to limit global warming to less than two degrees Celsius above pre-industrial levels, the organisations claim that the oil licenses violated article 112 of Norway’s constitution, guaranteeing everyone the right to a healthy environment.”

The six activists, alongside Greenpeace Nordic and Young Friends of the Earth Norway, hope that the European Court of Human Rights will hear their case and find that Norway’s oil expansion is in breach of human rights,” Greenpeace said in a statement.

In December, Norway’s Supreme Court rejected the claim brought by the organisations, their third successive legal defeat.

READ MORE: Norway sees oil in its future despite IEA’s warnings 

While most of the judges on the court agreed that article 112 could be invoked if the state failed to meet its climate and environmental obligations– they did not think it was applicable in this case.

The court also held that the granting of oil permits was not contrary to the European Convention on Human Rights, in part because they did not represent “a real and immediate risk” to life and physical integrity.

“The young activists and the environmental organisations argue that this judgment was flawed, as it discounted the significance of their environmental constitutional rights and did not take into account an accurate assessment of the consequences of climate change for the coming generations,” Greenpeace said.

On Friday, the Norwegian government unveiled a white paper on the country’s energy future, which still includes oil exploration despite a warning from the International Energy Agency (IEA).

The IEA recently warned that all future fossil fuel projects must be scrapped if the world is to reach net-zero carbon emissions by 2050.

The Norwegian case is an example of a global trend in which climate activists are increasingly turning to courts to pursue their agenda.