Qatar Oil Contract Loss Raises Questions over Maersk Oil's Future

Maersk Oil's loss of a major oil production contract in Qatar this week raises questions about the future of the company's oil business at a time when parent A.P. Moller-Maersk has said it is considering a break-up.

 

Maersk Oil has lost the contract to operate Al-Shaheen, Qatar's largest oilfield, which made up 40 percent of Maersk Oil's output last year.

 

The loss of the contract, which Maersk has had since 1992, follows comments last week from chairman of the Danish shipping and oil group about a possible split of the conglomerate into separate companies.

 

Jakob Thomasen, head of Maersk Oil, told Reuters in a telephone interview that the oil company would focus now on building on its business in the North Sea, in Kenya and other areas.

 

Analysts said that without the Qatar contract Maersk Oil would probably be too small to be listed as a stand-alone company, and that the business could therefore become a takeover target for larger oil companies.

 

"After this Maersk Oil looks like a more obvious divestment candidate," analyst Morten Imsgard from Sydbank (SYDB.CO) said.

 

He said the price tag for Maersk Oil could be between 50 billion and 90 billion Danish crowns ($7.5-13.4 billion).

 

He also said that investors with a short-term view on Maersk Oil shares probably would have liked it to pay out the money from the Qatar contract to shareholders rather than reinvesting it in other parts of the oil business.

 

Total won a 30 percent stake in a new 25-year contract to operate the field on Monday.

 

When asked about the future of Maersk Oil, Thomasen referred to the strategy review process at the group which should result in an announcement before the end of third quarter.

 

Maersk shares fell almost 9 percent on Monday, partly on media rumours of the contract loss. By 1152 GMT on Tuesday, the stock was up 1.4 percent, in line with the European stock market .

 

The Danish company had provided a "very competitive" bid, but also one that would have generated a profit for the company, Thomasen said.

 

Thomasen said that the conditions in the new contract were changed a lot from the old one, and that Maersk already knew before Monday's announcement that even if it had won the contract the field would have played a much smaller role for the company.


($1 = 6.7159 Danish crowns)

(By Teis Jensen; Editing by Mark Potter and Jane Merriman)