Mongstad refinery uncertainties continue / News / The Foreigner

Mongstad refinery uncertainties continue. Statoil’s statement it may have to close the Mongstad oil refinery amongst huge deficits has prompted reactions from politicians. Prime Minister Jens Stoltenberg has billed the facility as being the government’s “moon landing”, leading the way for CCS (Carbon Capture and Storage) on the road to cutting Norway’s CO2 emissions, which have peaked in recent times. The CCS test centre, known as the CO2 Technology Centre Mongstad (TCM), is due to be opened by the PM and Minister of Petroleum and Energy (MPE) Ola Borten Moe 07th May, but the exact date of full CCS at Mongstad has been pushed back over time. 

mongstadoilrefinery, carboncaptureandstoragemongstad, statoilprofitsconcern



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Mongstad refinery uncertainties continue

Published on Thursday, 29th March, 2012 at 14:58 under the news category, by Michael Sandelson   .
Last Updated on 29th March 2012 at 17:26.

Statoil’s statement it may have to close the Mongstad oil refinery amongst huge deficits has prompted reactions from politicians.

Mongstad
Mongstad
Photo: Nina Aldin Thune/Wikimedia Commons


Hit or miss?

Prime Minister Jens Stoltenberg has billed the facility as being the government’s “moon landing”, leading the way for CCS (Carbon Capture and Storage) on the road to cutting Norway’s CO2 emissions, which have peaked in recent times.

The CCS test centre, known as the CO2 Technology Centre Mongstad (TCM), is due to be opened by the PM and Minister of Petroleum and Energy (MPE) Ola Borten Moe 07th May, but the exact date of full CCS at Mongstad has been pushed back over time. 

Minister Borten Moe’s predecessor, Terje Riis Johansen, left the government, allegedly to run for local political office. He had gained a vote of no confidence from the Opposition before that, following revelations he knew about the ‘delay’, but had not informed parliament about it. 

At one stage, it looked as though CCS would not happen at all when the government did an about-turn amongst viability and cost uncertainties, subsequently changing its mind and proposing a half-solution.

Leaking money

As the government lost a Mongstad politician, Statoil has been losing Mongstad refinery staff and money. Arve Johnsen, the then head of Statoil, had to resign in 1987 when he failed to bridge the six billion kroner cost gap.

Moreover, whilst the accounts have not yet been prepared for last year, the plant’s value was written-down in the third quarter of 2011 by 3.1 billion kroner. Mongstad oil refinery deficits also totalled 9.2 billion kroner in 2009 and 2010. 

“The loss comes following the plant’s extremely good economic situation between 2000 and 2008. From 2004 to 2008, the surplus was nearly 10 billion kroner,” declared Statoil press spokesperson Morten Eek to Stavanger Aftenblad.

Morten Eek
Morten Eek
Øyvind Hagen / Statoil
“Everything almost ceased when the financial crisis hit, which turned the situation around. While parts of the industry have now begun to recover, the refinery has not yet emerged from the crisis.”

Unnecessary costs

Concerned about the refinery’s challenging financial situation for the next few years, he said, “investments will be put on ice and demand for the refined products produced at Mongstad and other places, has fallen. The situation at Mongstad is extremely serious.”

He would not directly answer whether the facility would have to be shut, but stated costs had to be cut and profits upped. Mr Eek added it was important not to be “forced into a situation where we are not able to compete in this tough market.”

Amongst reports that the company is seeking exemptions from CO2 tax and so-called green certificates, Statoil subsequently announced it was considering closing Mongstad. 

The company alleges it has warned the government about the financial burdens of these several times. Whilst Statoil is not looking to avoid paying taxes and fees, it is worried about competitiveness, claiming the carbon tax will lead to a “double taxation” situation.

Morten Eek told Klassekampen, “We are keen to get out of a situation where we lose a lot of money. None of our activities is protected in perpetuity, and we must have profitability. We see that there are some relatively high levels of taxes that have been introduced and more are on way.”

Committed

Trond Giske, Trade and Industry Minister
Trond Giske, Trade and Industry Minister
Scanpix/Prime Minister's Office
There was also information suggesting Statoil had recently asked for a crisis meeting with Minister of Trade and Industry Trond Giske, which the ministry denies.

“A meeting was held between the minister and Statoil on 30th November last year. At this meeting, we were informed about the difficult economic situation of the refinery at Mongstad,” minister Giske said in a press statement.

“We listened to Statoil’s message and their needs and take these further as part of our work. Nevertheless, we also stated that the schemes Statoil was concerned about are to do with the Ministry of Finance, Ministry of the Environment, and the Ministry of Petroleum and Energy. This concerns CO2 and green certificates, amongst other things.”

When asked for a comment by The Foreigner, Ministry of Finance officials stated the government has agreed to refer questions about Mongstad to the Ministry of Petroleum and Energy.

In an email to The Foreigner, Ivar Vigdenes, political advisor at the Ministry of Petroleum and Energy, acknowledged the financial crisis has presented refineries with profitability challenges.

“The ministry has been engaged in a dialogue with Statoil about the situation throughout the winter, and will of course continue to do so. The clear message we have received from Statoil is that their goal is continued profitable operation of the refinery. Statoil is working to look at both income and expenditure for the refinery to ensure this,” he concluded.




Published on Thursday, 29th March, 2012 at 14:58 under the news category, by Michael Sandelson   .
Last updated on 29th March 2012 at 17:26.

This post has the following tags: mongstadoilrefinery, carboncaptureandstoragemongstad, statoilprofitsconcern.





  
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