What's in a name change?
On March 15, the Board of Directors of Norway-headed oil and gas major Statoil ASA revealed that it has proposed a name of the company, to Equinor. The name change "supports the company’s strategy and development as a broad energy company".
"The world is changing, and so is Statoil. The biggest transition our modern-day energy systems have ever seen is underway, and we aim to be at the forefront of this development" said Jon Erik Reinhardsen, Chairman of the Board.
According to the statement, the name Equinor is formed by combining “equi”, the starting point for words like equal, equality and equilibrium, and “nor”, signalling a company proud of its Norwegian origin, and wants to actively use this in its positioning.
The world is changing, and so is Statoil. The biggest transition our modern-day energy systems have ever seen is underway, and we aim to be at the forefront of this development. Our strategy remains firm. The name Equinor reflects ongoing changes and supports the always safe, high value and low carbon strategy we outlined last year,” says chair of the board in Statoil, Jon Erik Reinhardsen.
The new name will be proposed to shareholders in a resolution to the Annual General Meeting on May 15. The Norwegian government, as majority shareholder, supports the proposal and will vote in favour of the resolution.
For us, this is a historic day. Statoil has for almost 50 years served us well. Looking towards the next 50 years, reflecting on the global energy transition and how we are developing as a broad energy company, it has become natural to change our name. The name Equinor captures our heritage and values, and what we aim to be in the future, said Eldar Sætre, Presdient and CEO of Statoil.
Furthermore, that Statoil’s strategy presented in 2017, sets clear principles for the development of a “distinct and competitive portfolio with long-term value on the Norwegian continental shelf, deepen in core areas and develop new growth options internationally”.
Equinor is a powerful expression of who we are, where we come from and what we aspire to be. We are a values-based company, and equality describes how we want to approach people and the societies where we operate. The Norwegian continental shelf will remain the backbone of our company, and we will use our Norwegian heritage in our positioning as we continue growing internationally within both oil, gas and renewable energy, said Sætre.
Third Nordic oil and gas major to change names
Statoil says that it is one of the world’s most “carbon-efficient” producers of oil and gas, and will develop its low carbon advantage further. In addition, that it is building a “material industrial position within profitable renewable energy” and expects to invest 15-20 percent of total CAPEX in new energy solutions by 2030.
We delivered solid results for 2017 and are today in a strong position. We have strengthened our competitiveness, radically improved our project portfolio and have a clear strategy for further development of our company. As we position ourselves for long-term value creation and to be competitive also in a low carbon future, we have been searching for a name that captures our heritage and values, and at the same time reflects the opportunities we see. I am confident that the name Equinor will support our strategy and vision to shape the future of energy, said Sætre.
Statoil becomes the third Nordic energy major to drop oil in its name. In 2015, Finland-headed oil refiner and renewable fuel producer Neste Oil began removing the final “oil” in its name to become Neste. In 2017, Denmark’s DONG (Danish Oil and Natural Gas) Energy became Ørsted.
Once formally approved May 15, we will start the rollout of the new name and brand. Equinor is a name that is forward-looking and creates a strong platform for engagement and dialogue with a broad set of stakeholders. We believe it will create internal alignment and pride, and help attract capital, partners and talents, said Reidar Gjærum, Senior Vice President for Corporate Communication in Statoil.
Just a communication and branding exercise?
Though not an oil refiner, Ørsted has come the furthermost having committed to phasing out the use of coal in its energy production and has divested its fossil gas interests. Neste on the other hand still refines conventional crude oil into fossil products but is seemingly focusing its investment attention to expanding its renewable fuels capacity which already generates more revenue than its fossil.
While Statoil aims to change to an oil-free name – no doubt to be better able to communicate its business with disassociation – unlike Neste and Ørsted, the company is heavily involved in oil and gas exploration. In addition, it is investing in off-shore wind and carbon capture and storage (CCS) in its effort to become the world’s most “carbon-efficient” producers of oil and gas.
By its own admission, it is the largest operator on the Norwegian continental shelf with over 40 assets in the North Sea, the Norwegian Sea and the Barents Sea, including fixed and floating installations. It is currently the second-largest fossil gas exporter to Europe and the world’s largest offshore operator with operations in Africa, Brazil, Europe and North America.
The company divested its fuel retail business Statoil Fuel & Retail in 2012 to global convenience store operator Canada-headed Couche-Tard Inc, although the Statoil brand was kept at fuel stations until the latter half of 2015 when Couche-Tard launched a global brand change.
Use it or leave it
The dilemma for the Norwegian State, the 67 percent shareholder, is similar to that of the Swedish State with Vattenfall and its German coal-fired power stations and lignite assets. On the one hand, holding a high international profile in global warming and climate change issues yet, on the other hand, earning handsome dividends as majority shareholders in fossil energy majors.
Risking international political credibility is one thing but the reality is that these dividends go into state coffers and pension funds. So it becomes a precarious balancing act for politicians in which a change of name makes perfect sense while working from a current “cannot afford to leave it in the ground (or under the seabed” to a position of “cannot afford not to leave it in the ground”.
As an oil refiner without own oil field and exploration assets, the Finnish State hasn’t had this dilemma with its shareholding in Neste. Meanwhile, the Swedish State cashed-in by allowing Vattenfall divest its the German lignite assets to Czech-headed Energetický a průmyslový holding, a.s. (EPH) in 2016 – theoretically, it could have written it off as a voluntary stranded asset leaving it buried and perhaps offered alternative opportunities for those would have lost jobs.
However, for Norway and Statoil, the situation is different. With fossil gas perceived as the “cleanest” fossil fuel, it seems very unlikely that leaving it under the seabed is going to happen anytime soon irrespective of large a “material industrial position within profitable renewable energy” the company reaches. Especially taking into consideration who the largest fossil gas exporter to Europe currently is.
That’s not to say it shouldn’t continue to pursue profitable renewable energy, upstream emission reduction (UER) and CCS with the Oil and Gas Climate Initiative (OGCI), it should and under any name it chooses. Indeed, at one time Statoil operated wood pellet plants in both Norway and Sweden. These were subsequently acquired by Pemco Energi, that in turn was acquired earlier this month by Solör Bioenergi.