I Think Equinor Needs a Huge Clean-up#

Unfortunate development: The increase in the number of employees is not reflected in production, says Olaisen.

Equinor is increasing, others are cutting

The chief analyst has compared the developments in Equinor with five of the largest companies in the world such as Exxon, Chevron, Shell, BP and Total. It shows that no one else has experienced a similar growth in the number of employees. Several of its competitors have instead reduced their staffing.

Around 1,000 employees work at the company’s branch in Fornebu outside Oslo.

Olaisen particularly highlights the two American companies Chevron and Exxon, which have managed to slim down their staff and at the same time increase production.

— Since 2007, Exxon and Chevron have had 20–30 per cent fewer employees, while Equinor has had 30 per cent more. That is a very bad sign.

— Technology has moved forward. Most are able to produce more oil with fewer people, says Olaisen.

We Need New, Young People#

NRK presents CEO Anders Opedal with Olaisen’s point of view. He believes Equinor has different challenges than the other oil companies:

Aged platforms: Equinor must now use a little more manpower to pump up oil and gas in the North Sea, says CEO Anders Opedal.

— You can’t have a direct comparison. The Norwegian shelf is mature. Many wells are more demanding to drill now than before. In addition, several of our platforms are older and require a few more employees, says Opedal.

But What Do All these New 5,000 Employees Do?#

— We have a wave of retirees ahead of us, and it has been important for us to hire new young people into the company, says Opedal.

— The new ones receive good training from those with long experience, before they retire.

In 2018, Equinor acquired Danske Commodities, which is engaged in power sales, mainly from Denmark. It employs around 600 people. The company currently generates good income for the company.

5 per cent work in the green department

When Opedal became CEO in 2020, he promised a major investment in green industries. Since 2017 and until today, the company has increased the production of renewable power by over 250 per cent. A restructuring Opedal believes explains some of the increase in the number of employees:

— We have several projects in Brazil, we have wind projects in Poland, the UK and the USA.

The latter is the gigantic wind project Empire Wind outside New York, which recently received a stop order from the Trump administration.

Although the company has grown in renewable energy, this part only had 1,099 employees at New Year’s, the company’s annual report shows.

Recommends cost cuts: Chief analyst at ABG Sundal Collier, John Olaisen has followed Equinor for 15 years.

— This indicates that the main growth in staffing has occurred in the oil and gas business, not renewables, says Olaisen.

Employees Low Cost#

Oil analyst Theodor Sveen-Nilsen at Sparebanken 1 has also seen the increase in the number of employees at Equinor.

Oil is so lucrative that employee expenses are less important to the market, says Theodor Sveen-Nilsen at Sparebanken 1.

— There is less oil production per employee in Equinor now than there was ten years ago. The renewables investment may explain a small part of this, but not very much.

— How does the market react to that type of development in the company?

— This is not something the market is very concerned about. If you look at the cost per barrel produced in Equinor, labor costs are an extremely small proportion.

Propose a new course for Equinor—do what you do best!#

The stock market does not like the green shift in Equinor, according to the analysts NRK has spoken to.

Downward share price: The value of Equinor has almost halved since the peak in August 2022. At that time, the value had increased sharply as a result of the war in Ukraine.

— Equinor is going to invest a lot in renewables in the future. The market places a very low value, or negative value, on it. And then the result is that the share trades at lower levels than it otherwise would have done, says Sveen-Nilsen at Sparebanken 1.

John Olasien agrees:

— Equinor has no competitive advantage in onshore solar or wind, and they have not done particularly well with these projects either.

Equinor can offshore, that’s where they are good. But, they have less luck when they try on land, says Olaisen.

He suggests a new course for the company, a course the company knows well, namely 100 per cent offshore.

— Equinor is one of the best in offshore and deepwater installations. Here they have a clear competitive advantage, says the analyst. This applies to both oil and gas installations and offshore wind.

The Johan Sverdrup Field in the North Sea#

Equinor’s gold mine: The Johan Sverdrup field was opened in 2019. It produces 700,000 barrels of oil per day, a third of the production on the Norwegian continental shelf. Photo: Ints Kalnins

Both analysts believe Equinor can rise if they refine their profile as an offshore company.

— Equinor is an incredibly attractive partner for other companies that operate far offshore, says Olaisen.

He believes the company can make good money by going this route, instead of renewables on land.

— Anders Opedal, why not concentrate on what you can do, namely oil and gas far offshore, and let other companies develop wind and solar?

— It is a bigger strategic question. We believe that we can create long-term shareholder value by focusing on the energy the world needs. Oil and gas. We are very good at that.

— Then we have also said that we will work on carbon capture and storage, transport and storage in particular. And potentially hydrogen, and also for renewables, says Opedal.

Source: NRK.NO