Rafsanjani, Statoil and the $15.2 Million Consultancy Contract
September 12, 2003
Oslo -- The head of international exploration and production at Norwegian oil and gas group Statoil resigned abruptly on Friday as police launched a probe into possible corruption in its Iranian business.
Chief Executive Olav Fjell accepted the resignation of international E&P chief Richard Hubbard, an architect of Statoil's drive overseas, amid a police probe into a deal with Iranian consultants, Statoil said in a statement.
State-controlled Statoil also revoked an 11-year $15.2 million consultancy contract signed in 2002 with London-based, Iranian-owned consultancy Horton Investment and said it would pay no more than the $5.2 million that it had already paid to the firm.
Statoil is the development phase operator of Iran's huge South Pars gas field in the Gulf.
"This decision has been taken in order to remove any doubt whatsoever about Statoil's compliance with its ethical guidelines," Fjell said in a statement. Fjell told a news conference he had no information pointing to corruption.
Statoil's shares ended down 2.6 percent at 66.25 Norwegian crowns, underperforming a soft Oslo bourse and the DJ Stoxx energy index of its peers.
On Wednesday, the Norwegian police's economic crime unit launched an investigation to find out if any criminal offence has occurred in Statoil's dealings in Iran, Statoil said.
"Statoil will assist the investigation in all possible ways," it said.
The economic crime unit said it was investigating Statoil to find out if it was involved in "punishable corruption", but it did not elaborate.
"NOTHING TO SIGNIFY CORRUPTION"
"I have no information that would signify corruption," Fjell told a news conference, but said that an investigation by auditors was still in progress. "I do not see that this will affect our strategy in Iran."
Fjell's comments were echoed by Norwegian Oil and Energy Minister Einar Steensnaes, who visited Iran in May to boost energy-sector cooperation between the two countries.
"So far there has not been anything uncovered that breaks ethical guidelines or that is corruption," Steensnaes told NRK radio. "By taking swift action they want to push aside any doubts."
Fjell said Statoil had dealt with consultants in Iran, including Mehdi Hashemi Rafsanjani -- son of the former Iranian president -- to obtain information on how to conduct business in the country.
Rafsanjani leads a subsidiary of the National Iranian Oil Company (NIOC), Statoil's business partner in Iran, a Statoil spokesman said. NIOC is due to take over as production operator of the South Pars field when development is complete.
Spokesman Kai Nielsen said that Rafsanjani was one of the two consultants that the company had worked most with in Iran, alongside Horton Investment's owner Abbas Yazdi, who introduced Statoil to Rafsanjani.
Analysts said Hubbard's resignation could be a setback for Statoil's plans to fuel growth through its international units.
Statoil appointed Ottar Rekdal, senior vice president for gas operations, to replace Hubbard.
"This is damaging in the sense that Statoil's growth going forward is supposed to come internationally, and then of course you do not need events like this," said analyst Knut Erik Loevstad at CAI Cheuvreux in London.
"Everyone is perhaps replaceable, but Richard (Hubbard) has been essential in building Statoil's internationalisation strategy," Loevstad said.
Hubbard, a geologist, became head of international E&P in 2000 after heading BP Amoco's (BP) operations in Brazil.
(additional reporting by Ola Peter Krohn Gjessing and Terje Solsvik) http://money.iwon.com/jsp/nw/nwdt_rt_top.jsp?cat=TOPBIZ&src=201&feed=reu§ion=news&news_id=reu-l12295670-u3&date=20030912&alias=/alias/money/cm/nw