Statoil’s UK PR campaign: a quiet power play

  • 19 Sep 2012, 12:00
  • Ros Donald and Chris Peters

Author: Oyvind Hagen/Statoil

If you've read a climate or energy story on the Telegraph website over the past week, you may have seen that Norwegian oil and gas company Statoil has sponsored a series of articles in partnership with the newspaper. Discussing the UK's energy future, the series so far offers a fairly measured view of the energy challenges the country faces. By presenting itself as a moderate voice in the energy debate and emphasising its green credentials, Statoil told us it wants to boost natural gas's image and replace coal in the future of the UK energy mix. But is the company's stragegy as soft - and green - as it seems?

The Telegraph series

Statoil has so far produced four articles as part of its series, 'Statoil: Fueling the UK'. The series represents a significant investment. Based on the Telegraph's advertising rates, it appears to have cost Statoil at least £100,000 so far. And it doesn't seem shy of exploring the challenges as well as the opportunities for the gas industry.

The first piece by Statoil blogger Amy Wilson is a scene-setter outlining natural gas's "unique position" in balancing "reliable, available and relatively cheap" fossil fuels and the need to decarbonise using "expensive" renewables, which still need backup from conventional fuels. Incidentally, the piece appears strongly inspired in places by an earlier BBC report, following the BBC's lead in saying the government wants to  "almost completely decarbonise" UK electricity production by the 2030s, and reproducing a quote from head of campaign group Sandbag, Baroness Worthington, in which the peer advocates replacing coal-fired power with gas.

The other articles are a mixture of news and opinion. They include opposing pieces by two economists  - a pro-gas and nuclear call to arms by Ruth Lea (citing reports Carbon Brief has analysed here and here) and a reminder that the UK must balance carbon cutting and energy security by Paul Ekins. The news pieces encompass new tax breaks for North Sea oil and gas producers and a letter by the UK's Committee on Climate Change (CCC) opposing the government's apparent keenness to increase gas-powered capacity.

Statoil's media campaign

The Telegraph series seems to be part of a much larger campaign. Last May, Media Week reported that advertising agency UM London had landed a £2 million contract to run Statoil's first ever UK marketing campaign, aimed at raising the company's profile in the UK. According to Media Week:

"[The campaign] aims to target an 'informed elite' audience of business leaders, government ministers and senior civil servants as they plan to shape the policy for the UK's future energy mix".

The campaign is targeting other high-profile media outlets: it produced an advertising feature in the Times last year, and is also co-lead sponsor of the Financial Times's FT Global Energy Leaders Summit, taking place in London this week.

Carbon Brief contacted Statoil to ask how much it was spending on advertising Europe-wide, but the company declined to provide details. A spokesman spelled out how important the UK campaign is to Statoil, however. He said:

"The investment reflects our strong gas position and commitment to gas as an energy source for the future. Our ambition is to highlight the positive contributions of natural gas in UK, also from a climate perspective where natural gas can result in lower emission by replacing coal in the power mix."

The voice of reason

From the tone of the Telegraph campaign it appears that an important part of the Statoil campaign is to be seen as a natural energy partner for European governments, especially the UK. The company is the second-biggest retailer of natural gas to the European Union, behind Russian gas incumbent Gazprom.

Gazprom has suffered a serious downturn in its fortunes of late. From the European Commission's investigation of the company for suspected abuse of dominance in the gas supply market, to news that Russian independent suppliers are challenging its dominance, the once apparently invincible Gazprom looks increasingly embattled - a far cry from the company which shut down Ukraine's entire gas supply only a few years ago because the country had failed to pay its bill.

Statoil is well-placed to exploit Gazprom's weakness, as well as the reputation for volatility it has earned in previous years. So the campaign seems designed to present the Norwegian company as a more dependable alternative.

The greener option?

Aside from Gazprom, Statoil's other big rival is the coal industry. As is clear from its statement to us, Statoil is keen to promote gas as both the clean alternative to coal and a bridge fuel to renewables. By marketing itself as a greener option, Statoil wants to make itself more attractive to policymakers than cheaper coal.

There is a second part to its green message: Statoil is also promoting its expertise in carbon capture and storage (CCS) technology, which it's keen to market to the UK. The company runs a $1 billion carbon capture and storage facility and technology centre at its Mongstad refinery, and Statoil is keen to market CCS as an important part of the future energy landscape.

Statoil executive Rune Bjoernson claimed at a conference last year:

"A combination of natural gas, offshore wind and, in the long term, carbon capture and storage at gas-fired plants can allow Europe to meet its environmental emissions targets quickly and affordably."

But how tangible is Statoil's CCS promise? Critics point out that Statoil has only managed to make its Mongstad facility work at astronomical cost - 10 times over the facility's original budget. Although the facility is technologically innovative, it is still unclear how Statoil will be able to exploit its advances on a commercial scale to the timetables politicians appear to expect.

It's also reasonable to question Statoil's commitment to renewables in light of its recent actions. Last November, the company threatened to suspend gas supplies to the UK unless the government scaled back its commitment to renewables. That's not something it's mentioned so far in its Telegraph campaign. At the time, the Times quoted Rune Bjornson, Statoil's natural gas executive vice-president, saying:

"There are other places we can export the gas to apart from the UK. We have the gas you need if you want it."

It's not quite the level of realpolitik of Gazprom's heyday, but the message seems roughly the same.

Statoil's strong hand

Statoil has been gaining ground in the UK since last October when DECC announced an energy partnership with the Norwegian state - which owns two-thirds of Statoil. Former energy minister Charles Hendry said the agreement confirmed:

"...the importance of Norwegian natural gas to UK energy needs as an essential part of our longer term energy security, and it boosts cooperation on CCS and the development of renewable energy and interconnection."

But things have really picked up since Statoil's ultimatum last November. DECC said in a statement this July:

"The Government [...] is today confirming that it sees gas continuing to play an important part in the energy mix well into and beyond 2030, while meeting our carbon budgets."

Statoil also looks set to benefit from the Treasury's latest gas exploration tax breaks, having announced in August that it has discovered a new gas field in the North Sea.

The CCC's challenge

The way is not entirely clear for the company: the Conservatives' coalition partners, the LIberal Democrats are still against an all-out gas push, and the CCC's letter made clear that such a policy could be illegal under the climate change act.

Davey's response indicates Statoil doesn't have much to worry about, though:

"After 2030 we expect that gas will increasingly be used only as back up, or fitted with Carbon Capture and Storage technology. But, alongside up-scaling of renewables, nuclear new build, and eventually with carbon capture and storage, gas has an important role to play in the transition to a low carbon grid.‪"

The endgame

The outcome of the UK's coming energy choices will be crucial for the gas industry all over Europe. The UK is the only EU member state with legally-binding carbon reduction targets, and it is an influential player in the EU energy debate.

What's more, gas plant is a long-term investment: combined cycle gas plant has a lifespan of around 30 years - a fact that the International Energy Agency flagged last year when it warned the world could lock itself in to warming above two degrees Celsius if it continued to bring new fossil fuel installations online. So if new UK gas plant are built - with Statoil supply contracts in place - Statoil can guarantee its income for years to come.

The head of Statoil's Arctic unit, Rúni Hansen, spoke yesterday at the FT summit of the company's need to work with Arctic communities, building support for the company's drilling activities in the region. Likewise, Statoil's interest in persuading the UK it's both green and reliable is clear - even if it is willing to bypass the diplomatic route in favour of zero-sum tactics, as it demonstrated last year.

How does Statoil's PR campaign fit in to the plan? By appearing to promote debate in the Telegraph and at the FT summit, it might achieve its ambition to shape UK energy policy, but it also runs the risk of looking like it lacks answers to the questions it poses, on climate and CCS. In addition, by courting more publicity, it may also face questions about the robustness of its claims - especially its bid to be seen as part of a decarbonisation package.
Whether or not the company succeeds won't be immediately obvious - the effects are likely to be just as subtle as the campaign itself. Maybe, given the way that the UK's energy policy is going, Statoil's soft PR tactics are working already.

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