Statoil’s Evolving Strategy - Revised, 2015
Case number:
A07-14-0008
Abstract
Statoil ASA, the Norwegian government controlled oil and gas company, was widely acknowledged as one of the best performing National Oil Companies (NOCs). Statoil was founded in 1972 after oil was discovered on the Norwegian continental shelf (NCS). The government of Norway owned 67% of Statoil and the company was listed on the Oslo and New York Stock exchanges. In 2014 Statoil was faced with some serious challenges. The company's oil and gas production was not growing and international performance lagged behind Norwegian results. The company had recently announced it was going to back off its 2020 production targets and cut back on capital expenditure.
Teaching
The global oil and gas industry includes a mix of state-controlled national oil companies (NOCs), integrated oil companies (IOCs) such as BP, Chevron, and ExxonMobil, and many independent upstream and downstream firms, contractors, and suppliers. In most oil and gas-producing countries, natural resources are owned by the state and NOCs manage oil and gas on behalf of the state. The NOCs control about 90% of the world's oil and gas and most new oil is expected to be found in their territories. With the exception of the United States, Canada, and Australia, all of the major oil producing nations have NOCs.
Many NOCs are not very well managed companies and act more like government departments than fully functioning oil and gas firms. Some NOCs, such as PDVSA of Venezuela and Pemex of Mexico, operate as the de facto treasury for their country. Other NOCs suffer from constant and often misguided government intervention. This case provides a counterpoint to the stereotypical badly run and corrupt NOC plundering it country’s wealth. Statoil rivals the IOCs in technology and management skills and has helped Norway amass the world’s largest sovereign wealth fund. One objective for this case is to understand the factors behind the success of Statoil relative to most of its NOC peers. Are the factors uniquely Norwegian, cultural, institutional, or organizational? Will those factors allow Statoil to remain successful or will the company fall into the same pitfalls as many other NOCs? A second objective is to analyze the company’s performance using various metrics. A third objective is to analyze the company strategy and, in particular, to consider if the internationalization is defensible. A fourth objective could be to discuss state owned multinational companies and their ability to compete with private sector firms.
Many NOCs are not very well managed companies and act more like government departments than fully functioning oil and gas firms. Some NOCs, such as PDVSA of Venezuela and Pemex of Mexico, operate as the de facto treasury for their country. Other NOCs suffer from constant and often misguided government intervention. This case provides a counterpoint to the stereotypical badly run and corrupt NOC plundering it country’s wealth. Statoil rivals the IOCs in technology and management skills and has helped Norway amass the world’s largest sovereign wealth fund. One objective for this case is to understand the factors behind the success of Statoil relative to most of its NOC peers. Are the factors uniquely Norwegian, cultural, institutional, or organizational? Will those factors allow Statoil to remain successful or will the company fall into the same pitfalls as many other NOCs? A second objective is to analyze the company’s performance using various metrics. A third objective is to analyze the company strategy and, in particular, to consider if the internationalization is defensible. A fourth objective could be to discuss state owned multinational companies and their ability to compete with private sector firms.
Case number:
A07-14-0008
Subject:
Industry and Competitive Strategy
Year:
Setting:
Norway
Length:
21 pages
Source:
Library