BG Group Plc appointed Statoil ASA’s Helge Lund as chief executive officer, ending a leadership crisis at the UK’s third-largest oil and gas producer.
Lund, 51, who has led Norway’s state-controlled oil company for 10 years, will start next March and become Europe’s best-paid oil-company boss with a compensation that could reach £14million ($22.3million), BG said. He left Statoil with immediate effect, and marketing chief Eldar Saetre will serve as interim CEO, the Stavanger-based company said.
By poaching Lund, BG has brought in one of the industry’s most seasoned executives to take control after a turbulent period. Forged from the exploration arm of Britain’s former gas monopoly, BG was led for more than a decade by Frank Chapman, who retired at the end of 2012. His successor Chris Finlayson lasted little more than a year, quitting in March after production growth missed targets amid arguments with the board over the pace of asset disposals.
“Few will disagree that this is a great appointment from BG,” analysts at Bernstein Research, led by Oswald Clint, said in a note today. “Boasting experience in deepwater, gas markets and clear value over volume focus, he fits the requirements.”
Lund’s challenges at BG, where the stock has dropped 35% from 2011’s record, valuing the company at three- quarters of Statoil’s $73.9billion market capitalization, include overseeing the start of an LNG export project in Australia, the development of offshore fields in Brazil and the possible sale of assets in the UK’s North Sea. Lund declined to comment on his salary or BG’s operations in an interview in Oslo.
“I’m not driven by whether a company is big or small, but more by the content of the challenges and how exciting the job is,” he said.
“I’m looking forward to take up that challenge.”
Shares in BG, based in Reading, England, erased earlier gains and fell 1.1%to 1,014 pence at 2:45 p.m. local time. It was the best performer on the FTSE 350 Oil & Gas Producers Index.
Statoil fell as much as 4.6% in Oslo, the most in five months.
“Helge is ideally suited to lead BG Group in the next phase of its growth,” said Andrew Gould, chairman of BG Group, who’s been running the company day-to-day since Finlayson left.
“Helge’s track record speaks for itself. He has built a world- class exploration and production portfolio at Statoil.”
Lund has been CEO at Statoil since 2004, joining the company after it had been involved in a bribery probe in Iran. Lund oversaw Statoil’s merger with Norsk Hydro ASA’s oil and gas assets, reinforcing the company’s domination of Norway’s petroleum industry.
Even as Statoil remains the operator of more than 70% of the Nordic country’s oil and gas production, it expanded abroad under Lund’s leadership. Statoil has increased its exposure to countries from Brazil to Tanzania, and placed a significant bet on US shale oil and gas, buying Brigham Exploration Co. for $4.4billion in 2011.
More recently, Lund has been the architect of a sweeping efficiency and streamlining programme set in motion earlier this year to raise shareholder returns as Statoil confronts cost and energy-price challenges afflicting the whole industry. Statoil, 67% owned by the state, scrapped production-growth targets and cut spending plans through 2016 while preparing larger cuts for the years ahead.
Statoil has also sold off assets for more than $22billion since 2010, including its retail business, as the company has focused its activities on upstream operations. Lund has overseen a series of exploration successes, with Statoil finding more conventional oil and gas than any rival in 2013.
Before joining Statoil, Lund was CEO of offshore- engineering company Aker Kvaerner ASA. A former consultant at McKinsey & Co, he has also been a political adviser to the parliamentary group of Norway’s governing Conservative Party.
“There comes a time for leaders when it’s right to move on — not only for themselves, but also for the organization they lead,” Lund said at a press conference in Oslo. “I still have enough motivation, involvement, energy and drive. But for Statoil, I think renewal can be right and important.”
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