Norwegian petroleum companies Statoil and Norsk Hydro elbowed into the global fray for oil Monday with a plan to form a state-controlled giant that would be the world's largest offshore oil producer.
Statoil said it was acquiring the oil and natural gas operations of its smaller rival in a $30-billion deal largely motivated by their drives to expand outside Norway, where the competition for offshore acreage is cutthroat amid high crude prices.
"Combining the best of both organizations, we will significantly improve our competitive position internationally and promote long-term vitality of the Norwegian continental shelf," said Helge Lund, chief executive of state-controlled Statoil.
The new concern would surpass Royal Dutch Shell as the world's largest offshore oil producer, the companies said.
Norsk Hydro shares soared 21.4% on the Oslo stock exchange, while Statoil fell 1.7%.
Norway is the world's third-largest oil exporter, after Saudi Arabia and Russia, and both companies have been buying into projects outside their home waters to offset gradually declining production at home.
"This is the start of a new era," Norwegian Prime Minister Jens Stoltenberg said. "The government sees the merger of the oil and gas activities of the two companies as industrially and strategically sensible."
Graham Weale of consulting firm Global Insight said the new company would represent "an unambiguous response to the growing dominance of [Russia's] Gazprom in the global gas scene."
Statoil's shareholders would hold 67.3% of the new company and Norsk Hydro shareholders would get the remaining shares.
The Norwegian state owns 71% of Statoil and 44% of Norsk Hydro, making approval seem assured. The government would own 62.5% of the new company, which would be renamed if the deal goes through as planned late next year. Stoltenberg said he wanted to raise the government's stake to 67%.
The deal, which requires approval by shareholders, the government and European Union regulators, was also endorsed by the country's largest labor union and the national oil association.
Lund would be chief of the new company. Norsk Hydro CEO Eivind Reiten was proposed as chairman and CEO of Norsk Hydro's remaining operations.
Analyst Kjetil Bakken, of Oslo investment firm Fondsfinas, said that a few months ago the government was against combining Statoil and Norsk Hydro but "they seem to have done a complete turnaround."