From Le Monde, June 21, 1999

ELF LOSES THE BATTLE FOR THE CONTROL OF SAGA PETROLEUM

The last attempt of ELF was an extension of the stock market battle for the control of the third Norwegian petroleum company, SAGA, until June 25. This failed on Sunday, June 20, when the public Norwegian group Norsk Hydro, associated to Statoil, claimed to control 90 % of the shares.

More than 70 % of SAGA shareholders accepted the offer, for a total amount of KR 20.1 billions (about $ 2.5 billions) , which adds to the 20 % already owned by Statoil. Norsk Hydro shareholders (owned at 51 % by the Norwegian state) should approve the operation on June, 23. The [Norwegian] government should approve, as he showed to be favorable, as did the European Commission.

The battle for SAGA burst by the end of May, on a background of redistribution in the oil industry. Harmed by the 1998 backlash, the Norwegians restructure. After a long discussion, the two first groups, both public, Statoil and Norsk Hydro, finally agreed on a sharing of SAGA. Hostile, her management looked for help they found in ELF, which was studying the files for months. The French group found there several interests. Buying SAGA would have increase ELF’s reserves of oil and gas in the North Sea (about twice), plus a gain on strategic prospects. Moreover, the stature of the White Knight fighting for the integrity of the company at the call of both her management and staff would give ELF the nice role in the game.

SECOND FAILURE

Within the company, such a win would have been welcome in regard of the poorly managed social conflict in the Exploration-Production. A success would also have been welcome by ELF President Philippe Jaffre, severely criticized for his shyness in an oil world in revolution. The failure is moreover the second in a few months, as the Belgian Petrofina, that ELF looked upon at a time, finally choose TOTAL.

This was not the first attempt at a French buying of SAGA Petroleum. ELF already tried in 1986, then TOTAL three years later. Both had to resign when facing the hostility of the Norwegian state, who wanted to keep home the oil reserves.

ELF speculated on a change of minds under the influence of the foreign owners of one third of the Norwegian company. Not so. The French group then gave up in front of a financial fight. There was no controversial comment either, as whatever the solution, the Norwegian government still decides of the licenses issued to the oil exploration in the North Sea.

Dominique Gallois