Statoil Mulls Navion Sale

Norway's Statoil is considering options for its loss-making shipping arm Navion, including selling the group or divesting some activities such as floating production or drill ships. Navion was formed in 1997 between Statoil, which holds 80 percent, and Norwegian shipping firm Rasmussen. Assets include around 12 shuttle tankers, a crude oil storage vessel, two production vessels and a drilling ship. Statoil has stated from the outset that it wanted to reduce its stake in Navion. But attempts to find a third party to join the Statoil-Rasmussen partnership were thwarted by poor tanker markets, weak oil prices, delays to oil project start ups and huge cost overruns to build the Navion I drilling ship. "Now we have a more pragmatic approach. We do not necessarily need to deal with Navion as one body," said Statoil spokeswoman Wenche Skorge. "There could be various solutions for various business areas. But we have not made any decisions yet." Navion, a world leader in offshore oil loading into shuttle tankers, operates one of Norway's largest shipping fleets with around 50 vessels including oil tankers and gas carriers. In 1998 it made an operating loss of $25.8 million and a net loss of $54 million. In the first half of 1999, the group swung into an operating profit of $6 million. Viktor Jacobsen, head of equity research at Den Norske Bank, said that in the bank's evaluation of Statoil this year it valued Navion at approximately $500 million . "We recommended that Statoil should sell the entire unit as soon as possible, except for those pieces which are vital to its production," Jakobsen said. "This is not a core area for Statoil. The Norwegian continental shelf is mature and Navion must go abroad to look for growth," he said. Jakobsen said he expected a "Norwegian solution". "It is more likely to go to a Norwegian buyer because most of its operations are situated here and it would be difficult to get majors, say in the U.S., interested," he said. Norwegian media has speculated that several companies are interesting in Navion including Norway's largest shipping firm, Bergesen, Ugland Nordic Shipping, the Fred. Olsen Group, and Denmark's A.P. Moeller. Bergesen Managing Director Svein Erik Amundsen declined to confirm if the company was interested in Navion.