Cablegate: Statoil Chief Discusses Global Investments With

DE RUEHNY #0791/01 3621201
P 281201Z DEC 09




E. O. 12958: N/A
SUBJECT: Statoil Chief Discusses Global Investments with

REF: (A) STATE 121808 (B) OSLO 741
(C)Backemeyer-Greenstein/Sirotic Email 12/18/09

OSLO 00000791 001.2 OF 002

(U) This document is sensitive but unclassified. Please protect

1. (SBU) Summary: Statoil Chief Executive Officer Helge Lund
provided the Ambassador with an overview of the company's
investments in the United States, Russia, Iraq, Iran and Norway in a
meeting on December 18. He stressed Statoil's transparency with the
USG with respect to past investments in Iran and reiterated the
company's commitment to abstain from new investments there. Lund
also shared his views on the environmental benefits of natural gas
use and suggested that carbon capture and storage (CCS) should focus
on natural gas rather than coal. End Summary.

2. (U) In a meeting with the Ambassador on December 18, Statoil CEO
Helge Lund offered a tour d'horizon of the majority state-owned
firm's investments and strategy in several countries, as well as his
views on domestic energy policy in Norway.

3. (SBU) Carbon Capture and Storage: Lund opened by discussing the
need to maintain a balance between pursuing "green" technologies and
increasing shareholder value, while positioning the company for a
world with higher future carbon prices. He said he was looking to
the United States to help solve problems with carbon capture and
storage (CCS) technology. The Ambassador noted Secretary Chu's
recent visit to the Test Center Mongstad (TCM) CCS site, but stated
that the United States had not committed to any specific path on the
CCS issue. Lund opined that clean coal is not a realistic objective
and that CCS would only work with natural gas. The environmental
benefits of focusing on greater use of natural gas have been
underestimated. However, he said he anticipated potential
environmental objections to the exploitation of shale gas.

4. (U) U.S. Investments: Statoil has invested USD 10 billion in the
United States in the last five to six years. Lund commented that
Statoil had a good partnership with Chesapeake, a U.S. firm that it
invested in several years ago. Recent increases in U.S. gas
supplies have implications for Europe's energy balance, since more
liquefied natural gas (LNG) will be available for European
consumers. This will reduce the continent's dependence on Russian
supplies. Lund suggested that the U.S. might even be in a position
to export gas in the future. He also mentioned a feasibility study
for wind power underway with the University of Maine. Lund
emphasized his desire to maintain dialogue with the USG.

5. (SBU) Iraq: Lund said that Statoil needed its "play" in Iraq, if
only in partnership with another firm (Lukoil). He expressed some
concern about both the security risks of working in Iraq and the
political risks associated with upcoming elections, though he
reported that visiting Foreign Minister Zebari indicated the
elections would not threaten energy contracts. Lund characterized
Iraq's bidding process as well-organized and transparent. He opined
that forecasts that Iraq will manage to ramp up oil production from
2-3 million barrels per day (mbpd) to 12 mpbd in seven years were
unrealistically optimistic.

6. (SBU) Iran: The Ambassador asked Lund about Statoil's
investments in Iran. Lund stressed that the company held to its
2008 commitment not to undertake new investments in the country and
was committed to sharing information with relevant authorities,
including the USG, on its activities. Regarding South Pars 6, 7 and
8, Statoil has completed the project and is now being repaid for its
investment. He noted there was some inaccurate information in the
public sphere about the size of Statoil's investments in Iran and
was concerned that accurate information be made available to us.
Lund told us Statoil was willing to provide additional information
if needed. Note: Earlier that day, Statoil executive Gunnar
Myrvang called Poleconoff on this issue. He noted that a
Congressional Research Service report cited investments of USD 2.65
billion in South Pars 6,7, and 8 but said Statoil estimates its
spending on this project totaled USD 700 million plus or minus USD
50 million (ref C). End Note. Noting that Statoil was doing all it
could to be transparent and to maintain a dialogue with the USG on
Iran, Lund said he hoped that Statoil would not be singled out for
sanctions. He added that sanctions on Iran would not be effective
unless Russia and China participated in them.

7. (SBU) Norway: Lund pointed to declining oil and gas production
as a large challenge for the country. He asserted that over 70
percent of Storting (Parliament) MPs would support opening the
Lofoten/Vesteralen offshore area to exploration and development over
the objections of environmentalists and the fishing industry if the
issue were to come to a vote. He opined that the governing Labor
Party could open the region to the energy industry if it turned to
opposition parties for support on this specific measure. Note:

OSLO 00000791 002.2 OF 002

Junior coalition partners the Socialist Left Party and the Center
Party are strongly opposed to opening the region to energy
development. End Note.

8. (SBU) Russia: Lund told the Ambassador that there are huge (3700
billion cubic meters) gas reserves at the offshore Shtokman field
and that the necessary technology is available to develop the field,
but the project faces a number of serious challenges, including:
lack of local infrastructure combined with local content rules; risk
of low gas prices continuing into the future, thanks to the impact
of shale gas discoveries; and overall political risk. Lund said he
was very worried about corruption and opined that it is worsening.
He also observed that dealing with Gazprom, Statoil's partner in
Shtokman, was essentially like dealing with the Russian Government,
while dealing with Lukoil, Statoil's Iraq partner, was totally
different. The Russian economy has been hit by adverse developments
in both gas export volume (down 25 to 30 percent) and reduced sales

© Scoop Media

World Headlines


UN: India’s New COVID-19 Wave Is Spreading Like ‘Wildfire’, Warns UN Children’s Fund

7 May 2021 A new wave of COVID-19 infections is spreading like “wildfire” across India, leaving many youngsters destitute, the UN Children’s Fund UNICEF said on Friday. In the last 24 hours, India registered 3,915 coronavirus deaths and 414,188 ... More>>

UN: Decades Of Health Gains At Risk In Brazil Due To COVID-19

Although COVID-19 cases are declining in Brazil, the pandemic is putting decades of public health gains there at risk, the head of the World Health Organization ( WHO ) said on Friday. With global attention and support focused this week ... More>>

UN Report: Myanmar Approaching Point Of Economic Collapse

The turmoil following the military coup in Myanmar, coupled with the impact of COVID-19 could result in up to 25 million people – nearly half of the country’s population, living in poverty by early next year, a United Nations report said on Friday. That ... More>>

Focus On: UN SDGs

Study: Cut Methane Emissions To Avert Global Temperature Rise

6 May 2021 Methane emissions caused by human activity can be reduced by up to 45 per cent this decade, thus helping to keep global temperature rise to 1.5 degrees Celsius in line with the Paris Agreement on climate change, according to a UN-backed ... More>>

UN: Learning From COVID-19, Forum To Highlight Critical Role Of Science, Technology And Innovation In Global Challenges

New York, 4 May —To build on the bold innovations in science, technology and innovations that produced life-saving solutions during the COVID-19 pandemic, the UN will bring together experts to highlight measures that can broaden the development and deployment ... More>>

What COVID-19 Has Taught Us: “Healthcare Can No Longer Exist Without Technology”

A grandmother in a village in the Gambia should have the same quality of life and access to healthcare they deserve as in New York or London. Photo: InnovaRx Global Health Start-up Works To Bridge Healthcare Gap In The Gambia By: Pavithra Rao As ... More>>