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Maersk ready for new oil investments

Maersk Group CEO Nils Smedegaard Andersen is prepared to acquire new oil projects in spite of the massive crisis in the oil industry.

Photo: Torben Strøyer, Polfoto

The drastically sliding oil price has forced the global oil industry to its knees and has thus had a severe impact on A.P. Moeller-Maersk.

The group's oil business has been forced to make impairments for more than USD 1.37 billion on its Brazilian oil projects in 2014 alone, just as the company's hunt for oil in Angola is being reconsidered.

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Yet CEO Nils Smedegaard Andersen makes it clear to Danish business media Finans that he and the company are ready to make 1-2 more investments if the right fields become available.

"As a conglomerate, we're in a special situation compared to other companies facing big investments. A number of oil companies could face problems in terms of getting projects off the ground with the oil price down by 50 percent. It is very plausible that these companies could be tempted to put these projects on the market. We have an advantage due to our solid equity and practically no debt. This gives us the opportunity to strike if a project comes along that fits perfectly in to our portfolio. This is the advantage we have due to our strong capital base," says Nils Smedegaard Andersen.

Prepared to take risks

Maersk's CEO admits that acquisitions in the oil industry in particular are accompanied by numerous risks, but this does not deter Nils Smedegaard Andersen.

"It will always be a big gamble in the oil industry to invest in projects that might not be as profitable as first assumed. That's part of the business and it's the reason why it has historically been an area that provides solid returns. But a medium-large oil company like ours doesn't have the resources to consider just any opportunity. We are realistic and we might be able to look at 1-2 investments in the current market," he says.

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The clear message from the Maersk executive arrives on the heels of both analyst and investor speculations about whether or not Maersk Oil has been slowing its business down, as well as whether oil is even still a core business at A.P. Moeller-Maersk.

Maersk analyst Lars Heindorff from SEB Enskilda calls the statements from Smedegaard surprising, but points out that Maersk will probably be looking into projects in a limited area.

"It seems obvious that if Maersk makes new acquisitions, the company will do so in Denmark, Norway or Great Britain. In other words, areas where the group has had good experiences," he says.

At Nordea, analyst Stig Frederiksen also points to the probability of Maersk acquiring a larger part of the Norwegian oil field Johan Sverdrup, where a number of the other shareholders could be interested in selling.

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