Betting on Oil Price Recovery, Statoil Snips Where Rivals Slash

"Oil firms know they have an obligation towards the Norwegian people to be allowed to reap and harvest the resource on the continental shelf," oil minister Tord Lien said. "There are obligations toward owning licences."

Unlike other nations, Norway gives away licences for free and provides big subsidies for exploration and development. Companies in return commit to certain spending and pay the world's highest oil tax at 78 percent once production starts.

Offering a carrot, Lien said the state would consider subsidising another stalled Statoil project.

Share Risk

Investors are not yet convinced by Statoil's approach. Despite a generous dividend, Statoil shares are down 11 percent over the past year, underperforming a 2 percent fall on the European oil and gas index. In dollars, the fall was a massive 32 percent.

The relatively small cut in investment and high dividend will eat into earnings this year, so that the stock remains "sensationally expensive" even at these lower levels, Swedbank analyst Teodor Sveen-Nilsen said. On a price-to-earnings basis, he estimates that Statoil is more than 20 percent expensive than rival shares.

"(Risk) can be boiled down to two things: the balance sheet is going to weaken, risking dividends being cut and its credit ratings lowered," John Olaisen, an analyst at Oslo-based ABG Sundal Collier said. "I think both scenarios are very likely."