• The oil refinery at Mongstad in western Norway is a modern highly-upgraded plant with an annual capacity of 10 million tonnes of crude.

    It is the largest facility of its kind in Norway, and medium-sized in European terms.

    The refinery belongs to Mongstad Refining, which is owned 79% by Statoil and 21% by Shell.

    All crude oil refined at the plant comes from the Norwegian continental shelf. The principal outputs are petrol, diesel oil, jet fuel and other light petroleum products.

Mongstad burns a hole in Statoil’s pocket

"Extremely serious situation".

Huge Mongstad oil refinery deficits have cost Statoil 9.2 billion kroner (USD 1,61 billion) so far and the company expects them to mount. 

“It’s an extremely serious situation at Mongstad,” Statoil press spokesperson Morten Eek tells Aftenbladet.

The refinery’s total deficit was 4.5 billion kroner (USD 0.79 billion) in 2009. Mongstad showed a negative result of 3.5 billion kroner (USD 0.61 billion) for 2010 because of operations and extraordinary write-downs, according to figures from Ministry of Trade and Industry government body the Brønnøysund Register Centre, Nordland County.

Head of Statoil Arve Johnsen had to resign his position in 1987 following a difference of 6 billion kroner (USD 1.05 billion).

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Whilst accounts for 2011 are not prepared yet, the value of the plant was written-down by 3.1 billion kroner in last year’s third quarter. Write-downs from autumn 2009 to 2011 total 9.2 billion kroner together.

“The loss comes following the plant’s extremely good economic situation between 2000 and 2008. From 2004 to 2008, the surplus was nearly 10 billion kroner,” says Statoil’s Morten Eek.

Financial crisis

“Everything almost ceased when the financial crisis hit, which turned the situation around. While parts of the industry have now begun to recover, the refinery has not yet emerged from the crisis. Investments will be put on ice and demand for the refined products produced at Mongstad, and other places, has fallen. This particularly applies to the Atlantic market, i.e. the western part of the world.”

Calling Mongstad’s financial situation for the next few years “challenging”, Mr Eek also cites extremely tough competition and a jump in the price of raw materials, amongst static petrol and diesel selling prices.

“We’re working very hard to secure the refinery’s profitability. This will be achieved by cost-cutting of around half a billion kroner for 2014, and switching production to more profitable products,” he says.

Is there a danger of activities at Mongstad being shut down?

“Our aim is to operate profitably, and none of the activities are protected. We rely on the refinery being profitable for us in the long run. The situation has to be turned around, and we must do what we can to cut costs and create more profitable operation. We don’t request any special treatment, but must also not be forced into a situation where we are not able to compete in this tough market,” concludes Mr Eek.

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“It’s an extremely serious situation at Mongstad,” Statoil press spokesperson Morten Eek tells Aftenbladet.

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