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Norwegian firms create oil giant Norwegian firms create oil giant
(about 1 hour later)
Norwegian energy giants Statoil and Norsk Hydro have announced plans to merge their offshore oil and natural gas operations. Energy firms Statoil and Norsk Hydro have unveiled plans to merge their offshore oil and gas operations, creating a global industry giant.
The deal would create the world's largest offshore oil operator, the companies said. The Norwegian companies said the deal would create the world's largest offshore oil operator.
The merged company would have total oil production of 1.9 million barrels per day, and proven oil and natural gas reserves of 6.3 billion barrels. The merged operator would have total oil production of 1.9 million barrels per day, and proven oil and natural gas reserves of 6.3 billion barrels.
Norway is the world's third-largest crude oil exporter.Norway is the world's third-largest crude oil exporter.
Shares in Norsk Hydro leapt by more than 24% in morning trading on the Oslo stock exchange, while Statoil's shares rose by almost 7%.
'New era''New era'
Under the deal, Statoil shareholders would hold 67.3% of the combined offshore operator, with Norsk Hydro shareholders owning the remainder. The industry faces an increasingly challenging international landscape - to merge now makes perfect sense Statoil/Norsk Hydro statement
Statoil would dominate the new offshore operator if the deal goes ahead.
Statoil shareholders would hold 67.3% of the combined offshore operator, with Norsk Hydro shareholders owning the remainder.
The Norwegian government, which is a key shareholder in both companies, welcomed plans to merge their operations.The Norwegian government, which is a key shareholder in both companies, welcomed plans to merge their operations.
"This is the start of a new era," said Norway's Prime Minister Jens Stoltenberg. "The merger is an excellent foundation for meeting the challenges facing the oil and gas industry.""This is the start of a new era," said Norway's Prime Minister Jens Stoltenberg. "The merger is an excellent foundation for meeting the challenges facing the oil and gas industry."
Statoil and Norsk Hydro have been facing fierce competition from rivals such as Russia's state-run oil and gas operator Gazprom.
Ambition
Statoil and Norsk Hydro's bosses say the merger deal makes sense
Under the proposed deal, the Norwegian government would hold 67% of shares in the new operator.
In a joint statement, the companies said the merged operator would be "a highly competent and financially strong Norwegian-based energy champion".In a joint statement, the companies said the merged operator would be "a highly competent and financially strong Norwegian-based energy champion".
They also said it would be well positioned "to ensure continued domestic excellence and pursue international business opportunities for long-term growth". "The recommended merger is driven by an ambition to grow in Norway and internationally," the companies said.
"The industry faces an increasingly challenging international landscape. To merge now makes perfect sense."
Carnegie oil analyst John Olaisen described the merger plan as "very positive" for both companies.
Statoil, which is based in Norway's western port of Stavanger, employs more than 24,000 people in 31 countries.Statoil, which is based in Norway's western port of Stavanger, employs more than 24,000 people in 31 countries.
Oslo-based Norsk Hydro employs 33,000 people in 40 countries.Oslo-based Norsk Hydro employs 33,000 people in 40 countries.
The companies said they hoped to complete the merger during the second half of 2007.