The chairman of StatoilHydro, Europe’s fifth biggest oil and gas producer, has resigned amid a growing scandal over the Norwegian group’s activities in Libya.

Eivind Reiten is stepping down just five days after StatoilHydro began trading on the Oslo stock exchange following the $35.5 billion (£17.4 billion) merger between Statoil and Norsk Hydro’s oil and gas business.

Mr Reiten, who became chairman in September, will remain in charge at Norsk Hydro, which is now focused largely on aluminium and electricity.

Crime investigators are currently looking into allegations that a former Norsk Hydro subsidiary paid sweeteners to a consultancy in an effort to gain better access to exploration acreage in oil-rich Libya.

Norsk Hydro bought Saga Petroleum’s Libyan portfolio in 1999 and it was transfered to StatoilHydro under the merger this year.

Mr Reiten yesterday revealed the preliminary results of a probe, stating: "The investigations so far indicate that Hydro may have had more extensive contact, and made more active use of the consultancy firm in question, than has previously emerged."

The company confirmed that it had contacted Okokrim, the Norwegian economic crime authority.

Mr Reiten said that the investigation into all aspects of “the circumstances surrounding Hydro’s engagement in the Libyan petroleum sector” would continue in close co-operation with StatoilHydro as well as with Norwegian and international authorities.

Norsk Hydro inherited agreements with the unnammed consultancy firm when it acquired the Libyan assets from Saga, which consist of minority interests in two fields.

Mr Reitin added that his resignation would not damage relations between Norsk Hydro and StatoilHydro. He said: “We will continue with good co-operation.”

The scandal echoes the controversy that engulfed Statoil four years ago, when the chief executive and chairman at the time resigned during an investigation into fees paid to London consultants related to business in Iran. Norwegian police deemed the fees to be bribes.

It is the second scandal to hit Norsk Hydro in recent weeks. In August, the Norwegian government, which held a 43 per cent stake in the firm, dismissed Jan Reinaas, the chairman, over a $36 million compensation payout that followed the termination of the company’s executive share option scheme.

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