ANALYSIS-StatoilHydro left to dominate hard offshore Norway

By Wojciech Moskwa and Joergen Frich

STAVANGER, Norway, Aug 29 (Reuters) - A single heavyweight, StatoilHydro, dominates oil and gas production on the Norwegian continental shelf and the gradual retreat of other big players is increasingly seen as a problem for future development.

Oil executives say consolidation among smaller companies may be the answer, as start-ups seek more financial and technical muscle to tap new petroleum resources after most of the North Sea's easy oil has been pumped out over the last three decades.

Last year major Norwegian company Statoil (STL.OL) took over the oil and gas assets of Norsk Hydro (NHY.OL) to create StatoilHydro, one of the world's biggest offshore producers.

The tie-up was pushed through by Norwegian authorities to boost StatoilHydro's ability to expand internationally but the move had profound implications on its home turf and sparked worries about competition on the shelf.

StatoilHydro is the operator of fields that produce 79 percent of the oil and gas off Norway. It directly sells 36 percent of output.

At the same time, declining prospects for big new oil or gas finds in the Norwegian North Sea have driven supermajors such as Exxon Mobil (XOM.N) and BP (BP.L) to sell stakes in fields or kept them away from licensing rounds for new acreage. Norway's last elephant-sized find was Ormen Lange in 1997.

This has put much of non-StatoilHydro production assets off Norway in the hands of independents and European utilities, which have bought up stakes in fields to increase the security of gas supplies.

"The problem is not that we're too big, but that many others are too small," StatoilHydro Chief Executive Helge Lund told the ONS oil and gas conference in western Norway this week.