Statoil Fights Off Shareholder Effort to Exit Canadian Oil-Sands Projects

Statoil ASA and its biggest shareholder, the Norwegian state, fought off an investor revolt against its Canadian oil-sands project for the second year in a row at its annual general meeting.

A majority of shareholders at Norway’s biggest energy company voted against forcing it to pull out of Canadian oil sands at Statoil’s meeting today. Statoil, 67 percent owned by the state, in 2007 bought North American Oil Sands Corp. for about $2 billion to tap an area estimated to hold the largest oil reserves outside Saudi Arabia.

“I understand the debate around this activity -- it’s technically challenging and it presents several dilemmas we’re working hard to contribute to resolve,” Helge Lund, chief executive officer of the Stavanger, Norway-based company, said today. “But these resources are an important component of our future energy supplies.”

Greenpeace and the WWF proposed a motion to scrap the project, backed by Norway’s opposition Christian Democrats and shareholders Storebrand ASA, Folksam Group, Opplysningsvesenets Fund and the Alfred Berg Ethical Fund, which combined hold less than 1 percent. The government opposed the motion after also suppressing a similar effort in 2009.

‘It’s Filthy’

“It’s filthy, it violates the rights of the indigenous people and it destroys natural resources on a massive scale,” said Rasmus Reinvang, a senior adviser at WWF, which bought Statoil shares as part of the effort. “We don’t expect to win today but this is an abscess that won’t go away.”

Royal Dutch Shell Plc and BP Plc, Europe’s largest oil companies, have also faced opposition to energy-intensive plans to extract oil from tar-like sands in Canada. Dwindling reserves in easier-to-access areas and rising prices are making oil sands and shale-gas developments more attractive to producers.

“Given that the government was of the opinion that Statoil’s investment in oil sands was a business decision, it voted against influencing the company to withdraw from this at last year’s AGM,” Robin Kaass, state secretary at Norway’s Oil and Energy Ministry, said in a statement. “The parliament has supported this stance on two occasions. Therefore the government will also vote against the motion at Statoil’s AGM this year.”

“If one can’t really prove the benefits of oil sand extraction in Canada and that one can do it in a responsible fashion then one should pull out,” Carina Lundberg Markow, head of responsible ownership at Folksam, which manages the equivalent of $30 billion, said by phone from Stockholm. “Statoil hasn’t been able to prove this.”

‘Problematic’ Oil Sands

Christine Toerklep Meisingset, head of responsible investments at Storebrand, said oil sands are “problematic” from environmental, social and financial perspectives. The Norwegian fund manager holds 0.6 percent in Statoil and will not divest its stake over the oil-sands project, she said.

Oil is extracted by separating it from sand with heat in a process that releases 15 times more greenhouse gases per barrel than North Sea output, according to Greenpeace. The oil-sands area is about 750 kilometers (466 miles) northeast of Calgary.

Statoil, seeking to counter dwindling output at home as North Sea fields mature, plans to start production at its 10,000-barrel-a-day demonstration Leismer project in Canada at the end of the year. The company said in March that it aimed to reduce carbon-dioxide emissions from oil-sands production 25 percent by 2020 and more than 40 percent in 2025.

“With regards to profitability, oil prices have gone up significantly since the issue was on the agenda last year, so there’s been a positive development,” Ola Morten Aanestad, a Statoil spokesman, said by telephone today.

To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net

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