In the process toward the final closing of the merger between Hydro Oil & Energy and Statoil, which took place today, October 1st, questions have arisen concerning the Libyan portfolio that Hydro took over as a part of Saga Petroleum in June 1999.
The Saga portfolio in Libya mainly consisted of ownership in two fields; Mabruk (share of 25 percent) and Murzuq (share 8 percent).
In the period ahead of Hydro's takeover, Saga worked with the aim of getting access to a considerable exploration acreage as an operator. As a part of this work, consultancy agreements were made in January 1999 with a commitment to pay considerable fees. When Hydro became aware of these commitments Hydro chose to reject an offer to be granted these exploration rights, i.a. because Hydro could not ensure that the agreements were in compliance with Hydro's ethical guidelines. In conjunction with the termination of the agreements and the ensuing process aiming to sell the Libyan assets, Hydro in 2000 and 2001 honored commitments made by Saga amounting to a total of US $6.85 million under these agreements.
The mentioned sales process was not successful. Following a thorough consideration Hydro considered it realistic to continue the operations within Hydro's ethical guidelines. Working conditions in Libya have later improved and have given basis for increased activity. In 2006, Libya introduced a new and transparent licensing scheme in accordance with international guidelines.
As usual in license cooperation, invoices covering current expenses were issued from the operators to the licensees. In August 2002, Hydro received an invoice from the operator of the fields in the Murzuq basin amounting to USD 900,000. As Hydro could not establish that a payment would be in accordance with Hydro's ethical guidelines, the claim was rejected. Hydro has found that a similar invoice amounting to USD 300,000 was paid in December 2000.
StatoilHydro and Hydro will cooperate to provide the documentation and information necessary to disclose all facts in this matter.
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