Angola offshore_mag

Promisingprospects page 4

Doing their level best page 22

N O 1 2 0 0 3

Con

tent

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Since offshore operations began on the Norwegian continental shelf almost 40 years ago, one of the basicprinciples of national policy has been to create a strong domestic oil industry. The aim is to exploit natu-ral resources to build a firm industrial base.

The country has succeeded better than anyone could have imagined at the start. Through investmentand job creation, the oil and gas business has gained a prominent position in the Norwegian economy –with considerable spin-offs across industries and regions.

In addition come the extraordinary revenues earned from production and sales, which are being large-ly accumulated in government hands through its petroleum fund.

Many oil-producing countries now want to emulate Norway’s success. Securing economic and socialspin-offs is a key issue in Angola, Nigeria, the Middle East, the Caspian region, Venezuela and Mexico.

Building a domestic industry which can share in developing national oil and gas resources has a highpriority in all these places. That would strengthen the contribution petroleum can make to their long-termsustainable development.

For us in Statoil, contributing experience and knowledge to the foreign countries in which we make acommitment is an important part of our job.

After more than three decades of extensive development and a sharp growth in production, theNorwegian oil and gas province is moving into a more mature phase. Output from the major fields dis-covered in the 1970s and 1980s has been gradually declining.

Key challenges today involve extending the lifetime of these developments, which have formed thebackbone of Norway’s oil and gas business for many years. At the same time, the country must developand market resources from many small fields. And natural gas will acquire an increasingly prominent role.

These trends raise new issues and set new tests for the petroleum industry. The need for innovativetechnological and commercial solutions is at least as great as it has ever been.

As an operator, we have been responsible for many of the very biggest developments on the NCS overthe past 20 years. That has allowed us to place contracts worth more than NOK 500 billion in currentmoney.

The bulk of this work has been won by Norwegian companies against stiff competition. Over the pastdecade, domestic suppliers have accounted for well over 60 per cent of our orders. The share in 2002 was67 per cent. That has laid the basis for jobs and the development of considerable expertise.

Natural resources have not only given our country large revenues, but also laid the basis for a greatfund of knowledge. Norway has developed a strong petroleum cluster with many competent companies,large and small. However, the rapid growth of this industry has also contributed to the pressures current-ly being exerted on incomes, exchange rates and economic policy.

Norway has become significantly less competitive than its most important trading partners. Since themid-1990s, incomes have grown about 13 per cent faster than in these other nations and the NOK hasstrengthened by almost 15 per cent.

We at Statoil share the same challenges as the rest of Norwegian industry. High wage inflation and astrong NOK represent a competitive disadvantage for our business, both upstream and downstream.

Norwegian companies are still winning a large share of the contracts we award, but their competi-tiveness has been heavily undermined in jobs which involve a big input of working hours. This has meantthe award of several major assignments to other countries.

It is easy to understand the disappointment in companies which fail to win such contracts. That makessuch awards particularly challenging for us, and we accordingly carry out a thorough assessment beforetaking a decision. However, we have no choice but to accept the best bids in terms of quality, price, abil-ity to deliver and performance on health, safety and the environment.

Only in this way can we help to ensure the continued development of Norwegian expertise and tech-nology, so that our nation can meet the future challenges on the NCS and protect the international com-petitiveness of its industry.

“For us in Statoil, contributing experience and

knowledge to the foreign countries in which we

make a commitment is an important part of our job.”

Olav FjellPresident and CEO

S T A T O I L 2 M A G A Z I N E

28Scoring a success

36Trading for the future

4Promising prospects for

Angola’s oil blocks

22Clearing the ground on Melkøya

4 Flowering field

10 Norwegian in depth

12 Making good music

13 Breaking camp

16 Reclaiming the land

18 Committed to creating value

19 Thinking the world

22 Challenging constuction

27 Gas by remote control

28 An eye on the ball

35 Onside with sport

36 The interview: Playing the trading game

40 Technology: Shooting for zero

44 Status

48 Market focus: Getting sweeter

Front cover: Reconciliation

rules in Angola after decades

of war and unrest. Basina and

his friends in the village of

Boa Esperanza have begun a

new life. Oil from this nation in

western Africa is making an

important contribution to

Statoil’s non-Norwegian pro-

duction. (Photo: Øyvind Hagen)

No 1, volume 25, March 2003

Editor:

Benedicte Pentz, [email protected], +47 51 99 83 37

English editors:

Rolf E Gooderham, [email protected]

Eileen M J Doig, [email protected]

Circulation:

Liv Randi Paulsen, [email protected], +47 51 99 66 74

Published by:

Statoil ASA

N-4035 Stavanger

Tel: +47 51 99 00 00

Fax: +47 51 99 46 04

Design: Apropos Reklamebyrå

Typesetting: Graphic department, Statoil

Printer: Bryne Offset. Circulation: 18 000

Reproduction only by permission from the publisher

Internet: http://www.statoil.com


NORDIC ECOLABEL

FloweringfieldThe first cargo of Angolan crude

sold by Statoil coincided with the

outbreak of peace in this African

nation last year, after four decades

of conflict. Statoil Magazine has

visited the world’s largest produc-

tion ship on Girassol off Angola.

4

5

Operative David Finda takes a dawn

tour of the Girassol ship.

Afloating tangle of yellow piping isthe sight which greets the visitorarriving at the Girassol productionship after a one-hour helicopterflight.

The massive vessel lies motionless in the tropi-cal sea, while various other ships cut through theslightly choppy water on either side.

“Girassol” means sunflower, but that can hardlybe the reason why the complex web of piping ondeck has been painted its cheerful colour.

And Angola’s recent past is no sunshine story.Slums along the road to the heliport outside the cap-ital, Luanda, show what 40 years of almost contin-uous war can do to a country and a people.

But peace was restored in April 2002, and thenation is trying to get back on its feet. Extensivenatural resources provide a rich endowment.

This country ranks, for instance, as the secondlargest oil producer in sub-Saharan Africa afterNigeria – where Statoil also has operations.

Conditions on Girassol include a temperature of33°C and high humidity. Hardly strange, then, thatmost of the 160 crew wear their boiler suits open tothe waist.

Two-thirds of these personnel are Angolans whospend two weeks offshore and have two weeks free.Foreign employees work a four week on-four weekoff rotation.

“Our aim on Girassol, as in all our Angolanoperations, is to replace foreigners with localemployees,” explains operations manager RogerPoirier from operator TotalFinaElf.

He notes that one of the challenges facing theindustry in Angola is the country’s shortage of tech-nical personnel.

“Employees must be sent to school before theycan start their training. Producing a qualified engi-neer can take five-six years. We have a continuousflow of students for our Angolan operation.”

The vessel is categorisied as a floating produc-tion, storage and offloading (FPSO) unit, and itsoutput ultimately passes to a loading buoy located1.5 kilometres away.

Oil tankers take on about 900 000 barrels at atime from the field every four-five days, and shipthese cargoes to Asia, America or Europe.

TotalFinaElf has 40 per cent of Girassol, whileStatoil holds 13.33 per cent. The other partners areExxonMobil with 20 per cent, BP with 16.67 percent and Norway’s Norsk Hydro with 10 per cent.

Statoil receives a consignment at roughly 25-dayintervals, and trades this and Hydro’s share fromLondon. With a low sulphur content, the crude issimilar to North Sea oils.

The field represents one of Statoil’s biggestsources of crude outside Norway, and Angola isvery important in the internationalisation processcurrently under way at the group.

“We’re partners in Angola’s ‘golden blocks’ –15 and 17,” explains John Knight, senior vice pres-ident for international oil in the InternationalExploration & Production business area.

“These licences have yielded a string of discov-eries. We’re also partners in block 31, where thefirst find in ultra-deep Angolan waters was madelast year.”

Girassol is the country’s first field to come onstream with Statoil as a participant. Production

began in December 2001. And a number of otherfinds are queuing to be approved for development.

“We think there’s still great potential for newfinds off Angola, and we’re interested in expandingour activities there,” says Mr Knight.

French and Portuguese are the working lan-guages on Girassol, while all the technical manualsare written in English. Signs on the FPSO are trilin-gual.

And Norwegian can occasionally be heard.Norway’s supplies industry is represented not onlyon the seabed (see separate article on page 10) butalso topside.

Hallgeir Jenssen is a senior service engineer fromCorrOcean, for instance, who has been sent to trainpersonnel in a computer programme which meas-ures the wall thickness of steel pipe.

A niche product and unique in the world, this


An Angolan block is 10 times larger than one on the Norwegian

continental shelf. The Girassol ship produces oil from block 17.

0 100km

ANGOLA

DEMOCRATICREPUBLIC

OF CONGO

CABINDA

LuandaAFRICA

Block 15

Block 17Block 31

L I N K S A N G O L A

T E X T inger.ueland@statoi l .com

P H O T O S oyvind.hagen@statoi l .com

Statoil became involved off Angola in 1991, and has

participated in 49 wildcat and appraisal wells. These

have yielded 20 discoveries. The group holds 13.33 per

cent of blocks 15, 17 and 31, and western Africa rep-

resents one of its international core assets.


Ron Corre (foreground), Dominique Lenache, Pierre Auzass and Sylvain Antre find work heavy going in the tropical heat.


Norwegian Hallgeir Jenssen (left) teaches Ana Oviedo from Ecuador and Angolan Maritchy Pedro how to monitor changes in the thickness of steel pipe.


software can identify changes as small as 0.5 percent and has been developed with support fromoperators off Norway.

“My impression is that Norwegian expertise isvery strongly placed, not only with FPSOs and sub-sea installations but also in many other disciplines,”Mr Jenssen observes.

“Norway has a reputation as a high-tech suppli-er and, while its industry might be regarded as a lit-tle expensive, the price is seen as worthwhilebecause of the quality involved.”

He has been on Girassol four times before, toinstall and commission the system as well as to pro-vide training in its use.

“The field has a long producing life, and itspipelines need to be monitored continuously,” henotes.

Mr Poirier says that many of the crew have expe-rience from the Norwegian continental shelf.

“People expect to find lower safety standards off

Angola, and are taken aback when they discoverthat the rules are just as stringent as they’re usedto.”

He is well satisfied with the health, safety andenvironmental results achieved on the field.

“TotalFinaElf’s regulations are as rigorouslyenforced here as anywhere else. We naturally haveour own safety supervisor on board, and hold regu-lar safety meetings.”

On the environmental side, he says the gas com-pressor on the vessel is “expensive but environ-ment-friendly”. It injects gas back below ground asan alternative to flaring.

Girassol lies in 1 400 metres of water and has 11subsea production wells on stream. Another fourproducers are due to be drilled later this year.

In addition come seven wells for water injectionto help maintain reservoir pressure, with theGirassol floater able to pump down 390 000 dailybarrels of water.

Wellstreams flow from the seabed through threethermally-insulated tensioned riser towers, each 1 300 metres high, linked by flexible risers to theFPSO about 200 metres away.

Output reached the current plateau level in lessthan four months, Mr Poirier reports.

“Start-up went reasonably well, and productionrose quickly to the average level of 200 000 barrelsper day. We’re very satisfied with this performance,and so are our partners.”

He also describes the resources in block 17 as“very good”. Thirteen promising discoveries havebeen made there, and reserves are estimated to totalabout three billion barrels.

“If national oil company Sonangol permits, wecould boost Girassol’s average daily output from200 000 to 230 000 barrels until 2006 by drilling anextra well,” says Mr Poirier.

Support ships Mærsk Attender, Seaway Legendand Seaway Explorer have adopted a triangular for-

mation near the FPSO to start work on laying a newproduction flowline to Jasmim.

This field is due to be tied back to Girassol in thesecond half of the year, and will be followed byRosa and Lirio in 2006.

Accommodation ladders extend down the sidesof the FPSO to the sea, allowing crewboats to layalongside to put off or pick up personnel as analternative to helicopter flights.

That contrasts sharply with Norwegian offshorepractice, based on helicopter transport. Whilewaves off Angola seldom top four metres, they canreach well above 20 metres on the NCS.

Operative Manuel da Costa is nearing the end ofhis tour and is looking forward to a fortnight onland. His wife, four children and mother live inLuanda.

“I like to spend my shore leave with the kids,preferably on the beach or in the park,” he explains.

The nationality of the ship’s operator is clearlyevident in the canteen, where both lunch and dinnerare followed by cheese, while an espresso machinestands in the dayroom.

After a 12-hour shift and a meal, oil workers relax with a game of

table football.

Inacio Pucuta monitors production from the control room.

Three cinemas show films in English, Frenchand Portuguese respectively, and the vessel has itsown gym and a combined library and music room.

This evening, Roberto Meizer from Argentinapeacefully strums the electric guitar. Roy Steemsonfrom Durban wants him to play Stairway to Heavenor something by Abba.

Both work for a scaffolding company and live inSouth Africa. Joao Xivi, a mechanic from Luanda,relaxes on the couch with a crime novel.

Alfredo Ferreira is a production operative dur-ing the day and volunteer librarian in the evenings.People pop in all the time to check out books andCDs. Angolan zuck music is particularly popular,he reports.

In the darkness outside, the lights of the PrideAngola and Pride Africa rigs can just be discerned.The Norwegian-owned Leiv Eriksson rig lies to thenorth.

But the Girassol FPSO will soon be getting evenmore company. It is due to be joined in comingyears by new oil installations on Angola’s promis-ing continental shelf.

Guitar-playing and reading make the evening pass for Roy

Steemson (left), Joao Xivi and Roberto Meizer.

Virtually all the subsea installations deployed on Girassol, the world’s largestdeepwater field, come from Norway.

FMC Kongsberg Subsea has its Angolan base and workshop in the portarea of Luanda. The Norwegian company set up shop there after winning aGirassol contract in 1998.

It has delivered all the subsea equipment, with the exception of locally pro-duced production tubing and pipeline bundles which link wells and manifolds.

The company’s personnel have also installed these fully-integrated subseaproduction systems and now inspect and maintain them.

Forklift truck drivers scoot to and fro with equipment in the huge Luandaproduction shop. Other workers have taken apart some of the massive assem-blies to inspect them.

Three closed case foundations loom over the quay as they wait to head fortheir new home on the seabed off Angola.

“Each of these units is 11 metres high,” reports offshore intervention super-visor Tor Egil Åsheim, one of seven Norwegians working at the base.

“Developments off Norway have provided the model for much of what’sbeen done in Angola,” he explains. “The technological skills we’ve developedare in demand.”

Almost 20 vessels are berthed at the quay. Generally speaking, FMCreceives shipments of large subsea components only twice a year. But suppliesare airlifted from Norway on a weekly basis.

“Later this week we’re expecting a big consignment of wellheads and man-ifolds,” Mr Åsheim reports. They will be added to 22 wellheads already sup-plied to Girassol.

“We’re due to install another 18 on that field, and then five on Jasmim,”says operations manager Neil McGregor. “All the equipment from Norwaywill be delivered by late next year.”

Of the company’s 170 employees, 44 have been recruited locally.Angolans are being trained on a continuous basis to take jobs at the base, onthe installation rigs and on the vessels.

“The training system we’ve set up has led with time to a very good trans-fer of experience and knowledge,” Mr Åsheim reports.

Before the project started, 40 newly-recruited Angolans were sent toNorway for training. Today, FMC provides all such education at the Angolanbase.

The company’s own education, training and development coordinatormonitors each employee individually.

More than 100 subsea wells are due to be installed off Angola over the nextcouple of years, and the FMC staff see a bright future in the local oil industry.

Norwegian in depth

Lights twinkle on the horizon as

David Finda does his rounds on

the Girassol ship.


Makinggood musicWhile all the discoveries in Angola’s block 17 are named afterflowers, musical instruments provide the designations for those inExxonMobil’s block 15.

More than three billion barrels of recoverable oil are alreadyproven in this licence, where development plans for Kizomba Aand B have received official go-ahead.

This project involves a new production ship on Kizomba A witha daily capacity of 250 000 barrels. Able to hold 2.2 million bar-rels, it will lie in some 1 300 metres of water.

By comparison, Statoil’s Åsgard A oil production ship in theNorwegian Sea produces 220 000 barrels per day and can store 910000 barrels. The water depth is roughly 300 metres.

The Kizomba A vessel emerged from the construction dock inSouth Korea during the winter and is now at the outfitting quaywhile equipment modules are lifted on board.

Plans call for it to start a 96-day tow to Angola in December andto begin production in July 2004.

With 950 million barrels in recoverable reserves, Kizomba A isdue to be developed with 54 wells. Work on drilling the producershas already begun.

The smaller Xikomba field has been given the go-ahead to comeon stream in late 2003. A tanker is being converted to produce upto 85 000 daily barrels in just over 1 300 metres of water.

Blocks 14-29 on the Angolan continental shelf are characterisedas deepwater acreage, while those from 30-34 are ultra-deepwater– down to 2 500 metres.

Two exploration wells have been drilled on BP’s block 31.These are named after heavenly bodies, and the Plutao 1 wildcathas yielded an oil discovery.

This was the first of four finds made by ultra-deepwater wells,but no development decisions have so far been taken on these.

Production from Girassol, Jasmim, Kizomba A and B andXikomba will boost Statoil’s total Angolan output to about 80 000barrels per day from 2006.

Adding Dalia, which is expected to receive development sanc-tion in 2003, will push its share of production from this countryabove 100 000 daily barrels.

Since Statoil’s goal is to produce 260 000 barrels per day out-side the NCS, Angolan blocks 15 and 17 are set to account for asubstantial part of that figure.

Angola’s next bidding round for offshore licences depends onthe results from exploration drilling in blocks 31 to 34. Statoil isconsidering opportunities to become an operator.

Oil was found on land in Angola in the early 20th century, butthe discovery remained unexploited for 50 years. Seismic survey-ing on the Angolan continental shelf began in the 1970s.

Today, oil accounts for more than 60 per cent of the country’sgross domestic product. Production has never been affected by thefighting.

Discoveries are made in two out of three exploration wellsdrilled off Angola, which compares very favourably with a globalrate of 15 per cent.


Every third Angolan has fled their home. Afterless than a year of peace, however, a growingnumber of these displaced people are returning.

campBreaking

The white bags of maize slide off thelorry with a dusty thump. Before pas-senger flights have begun, the cargoplanes at Luanda airport are preparing tofreight food and equipment to country’s

internal refugees.These displaced people are scattered over almost

300 different locations in a nation as big as France,Germany and Spain put together.

Anny Brenne Svendsen, local leader of theNorwegian Refugee Council, is taking me on a visitto the camps in the south-eastern region which theUN has asked her organisation to run.

The council provides humanitarian assistance torefugees and displaced people in 14 countries, andhas been present in Angola since 1995.

It organises temporary distribution of food andnecessities, legal help, information and advice, edu-cation and accommodation.

Under an agreement with the council, Statoil hascontributed funds to humanitarian projects over thepast three years in countries where the group has apresence.

Part of these funds were spent last year on train-ing teachers to work in the Angolan refugee camps,which help to accommodate some four million dis-placed people.

Because they have not crossed internationally-

recognised borders, these victims of war are notdefined as refugees and are not protected by the rel-evant UN convention.

A further 450 000 Angolans have fled to neigh-bouring countries such as Namibia, Zambia, theDemocratic Republic of Congo and Zimbabwe.

The aircraft flies over Luanda in the slantingmorning sunshine, which glitters on the corrugatediron roofs of the capital’s slums.

Angola is rich in resources such as petroleum anddiamonds, but its 13 million inhabitants are amongthe world’s poorest. Every third child fails to reachits fifth birthday.

A lacy fringe of white beaches runs along thecountry’s coast to the west, with the palms standinglike exclamation marks against the horizon.

But the cargo plane is heading inland, to theHuila province. Within a couple of hours, it passesover rain forest cloaking the slopes which rise to aplateau 1 800 metres above sea level.

Jon Tellum, head of the first camp we are visit-ing, meets us at the airfield in Lubango. Less thanan hour’s journey brings us to the town of Matala.

A local dam and power station made this an impor-tant defensive position for government forces duringthe civil war. The front line was only 10 kilometresaway, and landmines are still scattered thickly around.

But the town and the surrounding reddish-browncountryside were secure, so people from nearbycommunities sought shelter there.

An all-terrain vehicle conveys us to theCandjanguite refugee camp, where the dry fieldsare filled with round mud huts.

At peak, the local authority has hosted 80 000displaced people in 20 different locations. Drivenby hunger, the flow of new arrivals did not ceaseuntil last November.

Now 30 000 people occupy six-seven camps inthe area, living in traditional huts they build them-selves from mud bricks reinforced with sticks. Theroofs are thatched.

Most of the Candjanguite inhabitants have apatch of ground they can cultivate, about eight kilo-metres away, with help from the refugee council.

The aim is to make them as self-sufficient aspossible, and their other needs are met from sup-plies flown in once a month by the World FoodProgramme.

Mr Tellum helps the refugees on the agriculturalfront. He is a forestry graduate and has conducted areforestation school in the camps.

“You need to replant when so many people havelived in an area for such a long time,” he explains,and points to a clump of young trees.

In his fight against deforestation of the camparea, he has concentrated largely on planting euca-lyptus, jacaranda, papaya and mango.

Mr Tellum has been involved in developmentassistance and emergency aid work for more than20 years. A quiet man, he has often been the first toenter new areas to establish camps.

Helena Henda is one of the refugee council’s 14Angolans who provide schoolteachers from otherparts of the country with intensive courses in theTeacher’s Emergency Package (TEP).

She has accompanied us on the flight fromLuanda to provide follow-up for teachers in thecamp who use this special methodology.

Many children in the 12-17 age range havemissed out on school because of the war. They arenow too old to be given priority in the regularschools.

Roughly 60 per cent of Angolan children haveno access to education. The refugee council has


Marjana Teresa and her daughter Georgina Marizia aim to leave the refugee camp as soon as they have harvested their

vegetables.

The refugees get help in the camp to farm the land and keep livestock so that they

can be as self-sufficient as possible.

L I N K S A N G O L A

T E X T inger.ueland@statoi l .com


Statoil is supporting humanitarian projects being pursued in Angola by

the Norwegian Refugee Council and the Norwegian People’s Relief

Association.

agreed with the government that youngsters can beintegrated into ordinary schools once they havebeen though the TEP programme.

Statoil has financed the training of 50 teachersfrom Matala and provided the materials whichallow them to teach in the open air without the needfor paper.

The TEP model was originally developed byUnicef, and has been further refined and adapted forAngolan needs by the refugee council.

A large acacia tree serves as a classroom, andhappy children sit on stones and logs under theleafy canopy which provides perches for the twit-tering birds.

From the blue box which contains all the aids heneeds, teacher José Gala has handed out slates,chalk, pencils and rubbers.

The contents of one TEP box makes it possibleto teach two classes, each with a maximum of 25pupils, in any available location.

Up to 70 per cent of a class may be traumatisedby war, having seen adults shot, their mothers,fathers and siblings killed or abused by soldiers, orpeople injured by landmines.

Both sides in the conflict captured children andused them as labour. Now the refugee council musttrain teachers in how to deal with traumatisedpupils.

“Going to school increases their sense of securi-ty,” says Ms Svendsen. “They’re keen to learn andare glad to have somewhere to go every day.Making school pleasurable is incredibly importantfor them.”

But children with traumas have a tendency to beinattentive in class.

“We must show them we care, but it takes time,”says Alexandre Moises, head of TEP education in

Matala. “Lessons must include a lot of play. Thathelps the children to forget their experiences.”

A class is often split into smaller groups or pairsbecause that helps to make the youngsters feel moresecure. Much use is made of singing and drama aswell as games.

This approach makes heavy demands on theteachers. But learning through play means that thepupils do not find education exceptionally demand-ing.

The Tomba camp is about 20 kilometres fromCandjanguite, along a road which runs like anorange slash across the flat, dry landscape.

Team sports are being played there – handballfor the girls, soccer for the boys. The refugee coun-cil has given them balls and shoes, while their shirtsand football boots come from Statoil.

“Sport plays a very positive role in efforts toencourage peace and reconciliation,” Ms Svendsenobserves from the touchline.

Young people from Lubango help the refugees toorganise sports clubs, and also use drama to explainhuman rights, farming, health, preparations for thereturn home and the landmine danger.

Although people in Tomba have been displacedfrom areas controlled by both sides in the civil war,they have little sympathy for either Unita rebels orthe government’s MPLA army.

As they cautiously return home on foot or bylorry, the refugee council welcomes them by dis-tributing rations for a month at a time.

Each person gets 12 kilograms of maize, 1.8kilograms of beans, 75 centilitres of oil and 150grams of salt – adding up to a daily ration of 2 000calories.

In addition, they receive clothes, blankets, kitchen-ware and farming implements as well as seedcorn.

Reclaiming land is simple in areas which havebeen completely abandoned. But many refugeeshave been away for more than three decades, andothers may be occupying their former property.

So some of the displaced people want to stay inthe camps because of problems in asserting theirclaims to land ownership in such circumstances.

Marjana Teresa sits on a low bench outside herhut, with three-year-old daughter Georgina Mariziaasleep on her lap in the midday heat.

She lived in a neighbouring district before sheand her family had to flee a couple of years ago.They walked for five days, with some members ofthe party killed by mines and others shot.

“The children suffered,” she recalls in a sadvoice, with an almost expressionless face. “Theywere hungry.”

Now her family is preparing to leave. Her hus-band has already returned home, and she is prepar-ing to follow with their three young children.

But she will not be going until the vegetables onher camp plot have been harvested. Her other pos-sessions include a few cows, kitchen implements,blankets and clothes.

“I’m hoping for a future at home, but daren’tbelieve completely that the peace will last,” shesays.

The refugee council is making sure that her fam-ily and others returning home have access to cleanwater, schooling and healthcare.

While 300 people per month were going backwhere they came from between May and Octoberlast year, that figure had risen to 1 500 by January.

If peace persists and the camps continue toempty, the refugee council will also be able todepart from Angola in one-two years time - its jobdone.


Teacher José Gala holds a class in the shade of a tree. Gracianna Sekula and her friends are learning to read and write. The children also get help at school to overcome their

traumatic wartime experiences.

A dam allows the villagers to irrigate their land. With enough

water, the soil yields two harvests a year.

Boa Esperanza means “good hope”. And that is justwhat the residents of this Angolan village now pos-sess. Within a couple of years, they should nolonger need outside assistance.

Fertile fields of maize, beans, tomatoes andbananas have been created by refugees afterclearing the thorny scrub which used to cover thearea.

About 300 huts are surrounded by arable landirrigated from a dam lower down the slope.Provided it gets water, the soil is very productiveand yields two harvests a year.

The new settlement stands in the Kwanza Sulprovince, about 300 kilometres from Luanda.Twenty per cent of its 400 000 residents are dis-placed persons.

Although the refugees have cleared the land byhand in understanding with the authorities, theyhave no written deeds to show that the property istheirs.

The Norwegian People’s Relief Association ishelping four villages in this province, whichaccommodate about 2 000 displaced people.

Together with local partners, the association isrunning a rural development project which has beengetting support from Statoil since 1998.

Boa Esperanza resident Cristovav DomingosMolinho recalls the time in 1985 when he first hadto flee from his farm.

“We ran and ran that night. We hid in the bush-es. After four days, we reached this area complete-ly empty-handed.”

Six years later, Mr Molinho returned to his farm.But Unita rebels burnt the houses and destroyedeverything in the village during the mid-1990s.

The Molinhos farm, which raised cattle and cul-tivated bananas and oil palms, was also razed.Those who fled were the only survivors.

His wife, Maria Guisado, sits silently beside himwith their daughter Gunda. None of them speakPortuguese, only the local language.

The family arrived in Boa Esperanza for the secondtime in 1999, and have now decided to remain. Thisvillage, like the others, has no school or health care,but they are secure and have enough to eat.

Since the nearest classroom is a long way off,neither Gunda nor any of the other children receivean education. Her parents, like most of the other vil-lagers, are illiterate.

Mr Molinho says that he feels sure things willget better now that peace has returned, and seessigns which encourage his optimism.

The villagers think their lives are good now,after getting help to build the dam, the irrigationsystem and a silo. They have also learnt new farm-ing and fishing techniques.

A seed bank has been established, and improvedmethods of stockbreeding, composting, ecologicalagriculture and combating soil erosion introduced.

“International aid bodies aren’t supposed to dothe job for Angolans,” says Arne Øygard, the localrepresentative for the relief association.

“But we assist national organisations in ruralareas, so that Angolans can help each other. Thatallows us to get more out of our resources. For eachforeign expert, there are 100 locals.”

The refugee villages are due to be self-sustainingwithin a couple of years. Income from fruit andvegetable sales can be invested in simple equipmentsuch as pumps and hoses.

At Maria Julia, another of these settlements, 20or so mud huts with thatched roofs cluster aroundan acacia tree covered with orange blossom.

The relief association launched its project in thisvillage in 2000, and fertile fields now lie all around.

The River Cubal runs quietly below them, itsbanks green with dense vegetation. A black plasticpipeline conducts water to the banana plantations.

Maria Guisado has decided to start a secure new life in the village

together with her husband and children.


Reclaimingthe land

Through its presence in Angola, Statoil wants tohelp ensure that the country’s huge resources areexploited in a way which benefits the whole pop-ulation, affirms Geir Westgaard.

“After decades of war, the restoration of peacein Angola raises hopes that development will takethat direction,” says the group’s vice president forcountry analysis and social responsibility.

But operating in a way which strengthens thecommunity is often easier said than done, as chiefexecutive Olav Fjell noted in the first Statoil sus-tainability report last year.

That challenge is one which the group has cer-tainly faced in Angola, Mr Westgaard admits.

He believes that Statoil, through its commit-ment to ethically acceptable, environment-friend-ly and socially responsible conduct, can help togive Angolans better lives.

The positive impact of its investment relates toemployment, local procurement of goods andservices, and the transfer of technology andexpertise.

In addition come the benefits of building infra-structure and supporting the development effortspursued by various aid organisations.

“So far, it’s been more difficult to identify cor-

responding positive effects at the national level,”Mr Westgaard notes.

“That’s partly a result of the civil war, but alsoreflects weaknesses relating to transparency,responsibility and mode of government.”

International oil companies operating inAngola face growing calls to be more open abouttheir financial transactions, and to publishaccounts of what they pay the government in taxesand bonuses.

In that context, Statoil has asserted that itapplies the same standard of transparency inAngola as elsewhere. Accounts for its operationsin the country are openly available from theNorwegian Registry of Companies.

“But we also recognise that corruption is asocial evil which must be fought with openness,”Mr Westgaard emphasises.

“So we’re actively involved in the current dia-logue between companies, government and volun-tary organisations over ways in which greaterfinancial transparency can and should beachieved.

“We don’t feel we’ve anything to hide, and areaccordingly concerned to avoid suspicions oraccusations that we’re concealing information.”

Women outnumber men in Angola, but the patri-archal family system persists. Special projects are runby the relief association to promote female rights.

Its Women Can Do It programme motivatesthem to play an active role in public life, forinstance.

Although both genders are equally entitled tofarm, women find in practice that their access toland and irrigation opportunities is more restrictedthan for males.

To ease the heavy workloads borne by Angolanwomen, the relief association has established a“micro credit” scheme which provides training inselling products such as fish and farm produce.

Now 38, Laurinda Ananjo fled from a Unitaattack to Maria Julia when she was 20 years old.Both her parents were killed. She is raising six chil-dren today.

“Things are getting better all the time,” she says.“Since the relief association launched its projects,we’ve expanded our range of products andobtained better harvests.

“We’re also cultivating land which lies closer tothe village, so that we don’t have to walk so far toreach our fields.”

As a participant in the association’s project forwomen, she receives a batch of dried fish to sell oncredit.

Asked what her hopes are for the future, MsAnanjo says she wants to see a better life for herchildren and some health care provision.

Only 24 per cent of Angolans have access tohealth services, which has helped to reduce lifeexpectancy to 45 years. Roughly 50 per cent of thepopulation is less than 18 years old.

Many people in this war-ravaged country havelittle knowledge of their rights. The rescue associa-tion and its partners are working to spread informa-tion on democratic rules and principles.

To help in this work, they have recruited a youthgroup from the nearest town to pass on these mes-sages by acting them out on stage.

This team attracts the villagers of Maria Juliawith drums, song and dance, and the audience ofabout 60 stands and sits on logs under the acacia.

Three young boys perform a sketch about meet-ings. Suddenly, one of them apparently rememberssomething and cries out: “But we’ve forgotten tobring our wives!”

“Aaah,” the audience murmurs. That is true.Village women also have rights, but these are easi-ly forgotten.

Everyone laughs heartily when four young girlsappear, very indignant about being forgotten. Theyattract big applause as they scold the boys.

The performance also covers such topics ashealth and education before the youngsters startdiscussing how they should spend the money theyearn from their produce. The audience laughs andenjoys itself.

Ana Paula de Jesus Antonio, deputy head of thedevelopment programme in Angola, sums up: “Toachieve democracy, peace must be maintained. Toachieve that, people must be reconciled. Populareducation like this contributes to both goals.”

Committed to creating value

A street market in Luanda, which used to be acclaimed as one of Africa’s most beautiful cities. Seafarers from Portugal

arrived in the late 15th century and, although the country gained independence in 1975, Portuguese remains the official lan-

guage. The Angolan capital was built for less than 500 000 residents, but its present population stands at 4.8 million. With

unemployment high, many weapons are in circulation and crime is a major problem.


A key role has been assigned to Mr Hubbard, asexecutive vice president for InternationalExploration & Production (INT), in meeting theoverall goals communicated by Statoil to the capi-tal market.

These objectives are ambitious enough, withnon-Norwegian output intended to help Statoilachieve an annual production growth of four percent up to 2007.

And the group aims to secure six new interna-tional operatorships by the end of 2004. Three ofthese have already been acquired.

Another important target is an annual netincrease in reserves which will build up within afew years to 400 million barrels of oil equivalent ata finding cost of USD 1 per barrel.

Taken together, these ambitions are intended toensure that 40 per cent of the group’s productioncomes from operations outside Norway by 2012.

The NCS remains the cornerstone of Statoil’s over-all oil and gas production, and it will be importantfor the Exploration & Production Norway businessarea to sustain its daily output of roughly one mil-lion barrels for as long as possible.

But Mr Hubbard is in full swing with the jobof extending international operations on thebasis of expertise, technology and business prin-ciples developed over many years as an NCSoperator.

Daily production by the group from licences out-side Norway currently totals about 85 000 barrels.The bulk of this comes from the Girassol field offAngola and Venezuela’s Sincor project.

Mr Hubbard notes that INT achieved its produc-tion target for 2002, and says that the immediategoal is an international output of 260 000 barrelsper day by the end of 2007.

“In addition to our projects in Angola andVenezuela, we envisage an expansion in productionfrom fields west of Ireland and in Azerbaijan’s sec-tor of the Caspian.”

He believes that a good basis for INT’s futuregrowth was laid during 2002, which he describes asan excellent year.

Operatorships were secured in both Iran andVenezuela, with the Iranian assignment formallyawarded in late October.

This makes Statoil responsible for the offshorepart of development phases six-eight on the world’slargest gas field, South Pars in the Persian Gulf.

According to Mr Hubbard, this first operatorshipwon under his leadership represents an importantinitial step in the internationalisation process.

At the same time, it means that Statoil hasgained a good foothold for further commercialdevelopment in Iran.

The operatorship for block four in thePlataforma Deltana region off eastern Venezuela

was awarded to Statoil towards the end of the year. This acreage covers about 1 435 square kilometresand lies in 200-800 metres of water.

Soon after the New Year, it became clear thatStatoil had gained a third international operatorship– covering the Shah Deniz midstream (transport)gas development off Azerbaijan.

The group will be operator for the Azerbaijan GasSupply Company, which will execute and adminis-ter the sales contracts, and commercial operator ofthe South Caucasus Pipeline Company.

“We hope to add at least two more substantialoperatorships during 2003,” observes MrHubbard.

Asked to explain INT’s role and vision, he saysthat the experience and expertise gained on theNCS will help to convert a national oil companyinto an international player.

This involves continuing value creation in


A new course is being set by Statoil with the aim of building internationalsuccess on the basis of its experience from 30 years on the Norwegiancontinental shelf. Briton Richard J Hubbard has the job of drawing the map.

THINKINGTHE WORLD

L I N K S I N T E R N A T I O N A L G R O U P

T E X T ragnar.as land@statoi l .com

P H O T O Kjet i l Alsvik

Six operatorships outside Norway by the end of 2004 are the immediate

target for Statoil’s internationalisation drive. And by 2012, the group

wants 40 per cent of its total production to come from non-Norwegian

sources.

Norway’s offshore sector while strengtheningStatoil’s position in the European gas market, mak-ing a commitment to new exploration provinces andgaining operatorships abroad.

“With the new operatorships, we’re creatingadditional career opportunities in the internationalarena,” says Mr Hubbard.

“Our success is dependent on having the rightpeople in the right place at the right time. Investingin people processes is the key to achieving ourgoals.”

International success will also require the groupto pay more attention to downstream operations,performance-based management and strict capitaldiscipline.

As a former BP executive, Mr Hubbard says thathe was impressed by the group’s expertise when hejoined Statoil to head INT in November 2000.

“The impression I had was of a very high levelof competence. So I was a bit surprised at how lit-tle confidence people here had that we could suc-ceed as an international operator.”

He notes that major developments pursued byStatoil on the NCS, such as Gullfaks and Åsgard,have been some of the most difficult undertakingsanyone could tackle.

With his international experience, he recognisedthem as large and complex projects. Statoil’s abili-ty to execute them showed that it is also qualified tohandle similar assignments abroad.

He believes the lack of self-confidence couldhave something to do with a general Norwegiansense of modesty.

When he joined the group, Statoil’s foreignoperatorships were limited to the small Siri andLufeng fields off Denmark and China respectivelyand some British, Irish and Nigerian explorationacreage.

“I defined my role as building up self-confidencerather than an expertise which was already presentafter some three decades of activity on the NCS.”

Mr Hubbard is accordingly very glad that inter-national operatorships have now been secured, notleast because this demonstrates to the whole work-force what the group can achieve.

“The goal in coming years is to be able to selectthe best projects around the world and make a com-mitment to major high-quality operatorships,” heexplains.

“The next two-three years will therefore be veryimportant for the present restructuring process inStatoil, when we identify where in the world ourexpertise can best be applied.”

INT also plays an important role in relation tothe group’s other business areas, which includeshelping to find new sources of supply for a strongerfocus on the European gas market.

Downstream, the Manufacturing & Marketingbusiness area has focused by and large onScandinavia. But Mr Hubbard says it will also beaffected by the long-term internationalisation strategy.

Pursuing its activities in an acceptable way occu-pies an important place in the group’s plans tobecome a leading international player.

Published last year as The future is now,

Statoil’s first sustainability report looked at theimpact of its operations on people, the environmentand society.

Chief executive Olav Fjell has previouslyobserved that the group seeks to achieve results ona triple bottom line – financial, environmental andsocial.

Statoil gained a place last year in the Dow Jonessustainability index, and ranks among the top 10 percent of the world’s oil companies for this aspect oftheir business.

Mr Hubbard notes that Statoil works closely withnational oil companies where it operates, and that

these expect it to play a leading role both techno-logically and for health, safety and the environ-ment.

“The HSE aspect represents a substantial chal-lenge, because we’re maintaining and strengtheningefforts to implement our philosophy of zero injuriesor accidents,” Mr Hubbard adds.

He also emphasises the need to advance one stepat a time on environmental issues: “We can’t sim-ply enter a country and change everything, but eachstride we take must be an improvement on whatexisted before.”

INT established its global exploration (GEX)business cluster early last year, with four regional


Bill Maloney (left) and Richard Hubbard

have laid their plans for making Statoil an

international group.

units – the Americas, Europe, Africa, and MiddleEast/former Soviet Union – as well as a team fornew opportunities/global screening.

American Bill Maloney, who has more than 20years of international exploration experience withsuch companies as Shell, Texaco and Chevron,joined Statoil in February 2002 to head GEX.

Together with a team of about 150 people, hisjob is to hunt for oil and gas world-wide and lead allStatoil exploration activity outside Norway.

Mr Maloney has ambitious goals. The resourcebase must be expanded if he is to boost reserves bya net 400 million barrels of oil equivalent annually

at a finding cost of USD 1 per barrel in a few yearstime.

The target set for GEX by Mr Maloney in 2002was achieved, he says: “We delivered the equiva-lent of 200 million barrels of oil at a finding cost ofless than USD 1.5 per barrel.”

This objective remains unchanged in 2003. Inaddition, GEX wants to drill nine high-qualityexploration wells and make two new discoveries.

Mr Maloney also hopes that GEX will bedrilling 10-15 high-impact wells a year for thegroup from 2005: “If we can achieve success withthat size of programme, we’ll have the potential to

be ‘best in class’ and one of the world’s explo-ration leaders.”

But he emphasises that the real contribution hiscluster can make to Statoil’s growth potential issome way off. Patience and a long-term approachare the keys to success.

In the short term, the growth in INT’s productionwill have to come from oil and gas discoveriesalready made outside Norway.

Mr Maloney and his team played a key role in,and did the sub-surface evaluations for, thePlataforma Deltana application in Venezuela whichyielded the block four operatorship.

“However, the bulk of our contribution to pro-duction growth will come towards the end of thisdecade,” he says, pointing to the time it can take tobring new discoveries on stream.

He sees the many finds made off Angola, whichStatoil entered in the early 1990s, as a case in point.The group is a partner in blocks 15, 17 and 31, andsubstantial resources have been discovered in allthree licences.

“But it’s only over the past few years that we’vebegun to see production as a result of successes inthe early exploration phase,” Mr Maloney explains.

Like Mr Hubbard, he emphasises the importanceof Statoil securing big interests in non-Norwegianacreage. A holding of 20-50 per cent also increasesits influence in exploration projects.

And Mr Maloney makes it clear that globalexploration will present major challenges, both interms of HSE and in what he terms “above ground”risk in many countries.

“In our international industry, we know a lotabout the risks that can be met below ground. Butrisks associated with politics, transport and humanfactors are equally important.”

Knowing that he has the backing of top manage-ment is reassuring, he adds: “It gives us good sup-port. So does the whole GEX team. They’re moti-vated, conscientious and dedicated to success. Thatmakes my job a pleasure.”

In his view, the obvious approach is to concen-trate on those parts of the world where oil hasalready been found and where the big reserves lie.

But new areas containing large oil and gas fieldswill also need to be identified for the future. Russiacould represent one of these.

Messrs Fjell and Hubbard both met Russianpresident Vladimir Putin when he visited Norwaylast November. In the long term, the INT head seesRussia as an important place for Statoil to establishcommercial operations.

“Our upstream, downstream and gas businessesshould all have opportunities to achieve things inthat country from the word go,” he says.

In addition, he is looking at prospects in theMiddle East and Latin America. And one areawhich stands out in terms of gas is north Africa.

His aim during 2003 will be to accelerateStatoil’s hunt for oil and gas world-wide.


ChallengingconstructionA pioneering spirit prevails on thesmall island of Melkøya outsideHammerfest in northern Norway.Statoil is building a gas receiving plantthere for its Snøhvit development – inthe depths of an Arctic winter.

Magne Johansen takes a break in the winter cold and dark on Melkøya.

22

L I N K S S N Ø H V I T

T E X T berit .bryne@statoi l .com


Snøhvit ranks as the first offshore development in

the Norwegian sector of the Barents Sea. Due to

start flowing in 2006, its gas will be landed at

Melkøya in northern Norway.

23

The snow is falling and the wind blowingon Melkøya, with the temperaturearound freezing, as Magne Johansentakes shelter behind a workshop walland lights a cigarette.

Construction work is a challenge when it has tobe pursued in round-the-clock darkness and Arcticgales which can gust up to storm strength.

The wind chill has been known to make a tem-perature of -10°C feel more like -36°N. Such con-ditions are not unknown at 71°N on the coast ofFinnmark, Norway’s northernmost county.

Wandering ptarmigan no longer dot the terrainof the 70-hectare island. The flocks which flour-ished amidst the heather have flown, although theodd bird still shows up. Their place has been takenby machinery and men with sticks of dynamite.

Europe’s first facility for exporting liquefiednatural gas is taking shape on Melkøya, with LNGcarriers due to start arriving there in a few yearstime to fill their special spherical tanks.

But neither liquefaction plant nor sturdy jetty areto be seen at present. The gas is still under theBarents Sea away to the north-west.

Many hours remain to be worked both offshoreand on land before the wellstream can begin to flowvia Snøhvit’s subsea production installations and a160-kilometre pipeline to land.

The main challenge on Melkøy this past autumnand winter has been to blast out and level largemasses of bedrock, flattening and expanding theisland to accommodate the plant.

Colleagues Lars Edvardsen and Rune Sørlie

walk over the rocky terrain in the local costume –muddy protective boots, orange jackets proofedagainst wind and water, trousers over layers of ther-mal underwear, and hard hats pressed down on bluecloths which protect ears and neck.

After spray-painting orange crosses on theground at set intervals, they jump into their drillingrigs, manoeuvre them into position and bore to adepth of eight metres.

Small piles of grey rock dust accumulate behindthe machines until they move on to the next cross.It takes four minutes to drill a hole, and eight ofthese rigs are in action.

Messrs Edvardsen and Sørlie drive the biggest ofthese, and the bottom six metres of the holes theycreate will soon be stuffed with explosives.


Kenneth Hannu prepares to blast. The island is being levelled and expanded to provide space for the gas liquefaction plant, and 20-25 tonnes of explosives are used every week.

Once the roar of the salvoes has died away, thelumps of rock are lugged into a trench on the easternside of the construction road to help level the site.

By late morning, the darkness gives way to agrey dawn which soon turns to dusk before the skygoes black again. It is midday, but the lack of day-light presents no problems.

Drilling and digging, blasting and clearing, pound-ing and crushing continue around the clock as thelorries hurry to and fro on slushy roads.

Huge dumper trucks and wheel loaders thunderthrough the mud which covers the frozen subsoil,one of them operated by Ole Ludvig Myklebust.

With his Caterpillar 990, he sorts rocks intoheaps of different sizes. His machine can handleblocks of stone weighing up to 35 tonnes.

Mr Myklebust works a 12-hour shift from 06.00to 18.00. He is constantly on the alert for threatssuch as collisions and rockfalls, aided by 20 yearsof construction industry experience.

Some 2.5 million cubic metres of bedrock arebeing blasted out and moved around on Melkøy,and the site only falls silent from Saturday eveninguntil Monday morning.

A total of 1.1 million cubic metres had beenmoved from the start of construction work last Julyuntil mid-December, with an average of 80 000cubic metres being blasted free every week.

The weekly record was set in early December,with 117 000 cubic metres shifted. Much of thisrock is used as infill on land or put in the sea as abase for construction and export jetties.

Blocks of stone graded by size are also beingused for building a big breakwater to protect theplant against wind and waves from the north-west.This structure will be the largest of its kind inNorway.

Many machines are required for this gigantictransfer of bedrock. Ten excavators are engaged atthe blasting site, with three loaders and five drillingrigs helping to keep up the pace.

Alongside 18 dumper trucks elsewhere on theisland, two more excavators, a loader, a couple ofbulldozers and a crane toil to build the breakwater.

Various machines and barges are also being usedto ship away spoil, while the most important com-modities brought to Melkøya by barge are diesel oiland explosives.


Tor Befring (left), Jonni Kilpeleinen and Kenneth Hannu have got used to working with a minimum of daylight.

Paul Arne Bentsen tightens the belt on a digging machine at the Melkøya site, with Odd Ronald Opgård in the background.

While each shift gets through about 17 000 litresof diesel, the barges bring in 34 000 litres per dayfrom the Polarbase facility south of Hammerfest.

The aim is to keep the 100 000-litre storage tankfull most of the time, so that work will not be affect-ed if the weather gets so bad that the barges cannotmake the journey.

Kenneth Hannu, Jouni Kilpeleinen and TorBefring are preparing to set off another salvo. Withexplosives compounded on the spot, the projectgets through 20-25 tonnes per week.

Linde is the main contractor for building the landplant. In his portable office, construction supervisorLennart Wedin from this German industrial grouphas plenty to keep track of.

This includes road and seawater tunnels, pipeline

landfall, construction and export jetties, work camp,tank farm, temporary infrastructure and roads.

A large dry dock must be excavated to accom-modate the barge-mounted process plant, whichwill be built elsewhere and towed to Melkøya on avessel measuring 154 by 54 metres.

Construction of the tank farm and administrationcentre is due to start in April.

A Dano-Norwegian joint venture between AFSpesialprosjekt and E Phil & Søn has the largestworkforce on the island, and is responsible for thesite preparation.

Another partnership, the VS group linking con-tractors Veidekke and Selmer Skanska, is buildingthe road tunnel which will link Melkøya withMeland on the mainland.

Mr Wedin and the various sub-contractors allensure that the strict health, safety and environmen-tal standards set both by them and by Statoil areobserved during the construction period.

Risk assessments, safe job analyses, managementinspections, safety checks and HSE inspections arecarried out on a continuous basis.

And a close eye is kept on the weather. But theschedule has been maintained so far despite the cli-matic challenges – even though jetty work has beeninterrupted by high winds and seas.

Well over 500 people have been employed onthe Melkøya project during the winter, with 150 athome, 150 off-duty and 200 out on the site at anyone time.

Even more contractors are due to arrive on 1


The drilling rigs operated by Lars Edvardsen (left) and Rune Sørlie sink eight-metre-deep boreholes to accommodate explosive charges.

April, with a peak of 1 200 set to be reached in2005. However, most of the site preparation shouldbe completed by the end of this year.

Statoil will be building up an operations organi-sation totalling some 180 people in Hammerfest,and recruitment for this team started in early 2003.

Production and export of LNG is due to start inthe second half of 2006, with carriers shipping about70 consignments a year to customers in southernEurope and the USA until roughly 2030.

Gas by remote

controlThe Snøhvit development embraces the Snøhvit,Albatross and Askeladd fields in the Barents Sea, andranks as the first in Europe based on LNG production.

This project utilises new technology, and is extensiveand complex.

Being implemented in four stages, the offshore partembraces subsea production installations with 21 pro-duction wells and one for carbon dioxide injection.

These facilities will be remotely operated fromMelkøya, where the unprocessed wellstreams are alsodue to come ashore through a 160-kilometre pipeline.

Carbon dioxide, water, natural gas liquids and con-densate (light oil) will be stripped from the gas in thetreatment facility.

While the carbon dioxide gets piped back to the fieldand injected below ground, the natural gas is due to beliquefied and exported by ship.

At 1 January 2003, the estimated cost of the Snøhvitproject was more than NOK 45 billion.

Operator Statoil has a 22.29 per cent interest in thefield. Its partners are Petoro with 30 per cent,TotalFinaElf 18.4, Gaz de France 12, Norsk Hydro 10,Amerada Hess 3.26, RWE DEA 2.81 and SvenskaPetroleum 1.24.

Melkøya can be compared with a giant quarry, and huge quantities of stone are being moved.

The work camp houses the 500 construction workers currently employed on the project.

(Photo: Mats Forsberg)


An eye on theballNorwegian players – both

male and female – are mak-

ing their mark on the world’s

soccer pitches. And Statoil

is part of the team.

29

Ole Gunnar Solskjær and his present team, Manchester

United, draw capacity crowds at their Old Trafford ground.

(Photo: Erik Hannemann, VG)


New soccer heroines such as Norway’s Dagny Mellgren are

attracting a different audience to the game. Young girls

dominate the stands alongside their mothers and sisters to

watch her play in the US professional women’s league.

Interest is growing in Dagny Mellgren and

her colleagues in the Norwegian women’s

soccer team.

People do sometimes come up to me inthe street in Boston or ask for myautograph,” Ms Mellgren observes.“Maybe I’m a model to some of

them?”The young football ace has returned home to

Ålgård south of Stavanger when we meet, and isenjoying a quiet time with family and friends andtraining with her former club, Klepp.

She has been a fixture on the Norwegianwomen’s team – usually around the opponent’sgoal – for almost four years. The big challenge nowis the World Cup in China.

Norway will be one of 16 countries sendingwomen’s teams to this tournament, being played infive different cities between 24 September and 11October.

The final is due to take place in Shanghai. Chinawas also the venue for the first official women’ssoccer World Cup in 1991.

Such participation underlines the rapidly grow-ing interest in women’s soccer, confirms RakelRauntun, international coordinator for the women’sgame at the Norwegian Football Association(NFF).

When Norway played a friendly match againstGermany last September at Grimstad south of Oslo,for instance, the small local stadium had not seensuch a crowd for 30 years.

“Gates of 15-20 000 are common at the topwomen’s games in countries like Sweden, Franceand Germany,” Ms Rauntun confirms. TheGrimstad match, won 3-1 by the Germans, drew 4 000 spectators.

This trend reflects a steady improvement in thequality of the women’s game during recent years.And a growing number of league fixtures are beingshown on Norwegian national TV.

A recent survey for the NFF by opinion pollsterMMI aimed to identify what attracted people toattend soccer matches.

“The answer was unambiguous,” Ms Rauntunnotes. “People go when their local team is doingwell in the league. Six out of 10 respondentsalso wanted more media coverage of women’ssoccer.”

Offering top-class soccer where people live is alsoa factor in Norway. A number of internationalgames have accordingly been played outside Osloin recent years.

“These contests are important for recruitment,and they’ve also been fun to play,” comments MsMellgren.

Decentralising international matches could be

one of the reasons why the number of women’steams in Norway expanded by five per cent during2002, from 3 754 to 3 951.

Ms Mellgren and her national teammates havelong been preparing for the World Cup throughtraining, friendlies and tournaments. Expectationsfor the Norwegian women are high – they are reign-ing Olympic champions.

Although Ms Mellgren is only 1.65 metres tall,she is quick on her feet and dangerous in the goal-mouth. The Americans learnt that in the final at theSidney Olympics in 2000, when she scored the cru-cial goal to earn Norway a 3-2 win.

Nor has she been given much chance to forgetthat achievement. After the Olympics, she receiveda professional contract in the USA.

Her team for the past two seasons has been theBoston Breakers, one of eight clubs in the USleague. Norwegian national teammate RagnhildGulbrandsen plays for the same side.

“It’s great to be playing in the world’s only pro-fessional league for women, which has the reputa-tion of being the best,” says Ms Mellgren. “I’velearnt a tremendous amount there.”

The US season runs from April to mid-August.Her life then consists largely of training, travel andmatches.

She shares a home with three teammates, andspends most of her limited free time with friends –often at the cinema – or following soccer develop-ments elsewhere. Her favourite team is England’sManchester United.

Every so often, the Breakers women turn up atevents on behalf of the club, meet people and signautographs. That is hardly negative for recruitment.

Norwegian clubs have something to learn here,Ms Mellgren thinks. The Americans are very goodat putting the team in the public eye, and individualplayers are heavily promoted.

The Breakers attract an average of about 8 000spectators for home games. Many of these areyoung girls who play soccer themselves, and whobring their families.

“Right now I’m keen to carry on playing,” saysMs Mellgren, who was named as her team’s bestattacker in the 2002 season. “Soccer’s both a hobbyand job.”

Eleven goals in 20 games indicate that she is animportant player for the club.

Going professional has brought her out into theworld and provided “enough money to pay thebills”, but is unlikely to make her rich – at leastfrom playing soccer.

Men still stand to earn a lot more than women

from professional soccer. This means, for example,that a male player can save a lot more before ageends his career.

He can live thereafter on a combination of theseaccumulated funds with PR stunts and serving as acommentator.

His female counterparts must think about anoth-er career once their days on the pitch are over. Sothey educate themselves, often while playing.

Virtually all the members of Norway’s nationalwomen’s team are accordingly either studying oralready have an alternative profession.

“An education is important,” affirms MsMellgren. “There’s a life after soccer.”

She graduated as a radiographer from theUniversity of Bergen in February, although a USplaying career reduced her attendance at lecturesand extended her studies beyond the usual threeyears.

Studying alone was demanding but manageable,Ms Mellgren says modestly. When she finallyhangs up her boots, she can look forward to a white-coated hospital or clinic job. But that is still quite afew years away.


Fast and dangerous in front of the goal, Ms Mellgren is a soccer

hero in the USA. (Photo: Thomas Andreassen, VG)

L I N K S S P O N S O R S H I P

T E X T bente.bergoy.mil jeteig@statoi l .com

P H O T O S Håkon Vold

WEB http://www.bostonbreakers .com

SITES http://wwww.fotbal l .no

Dagny Mellgren has an Olympic gold medal for soccer and a US profes-

sional contract with the Boston Breakers. The 24-year-old also plays in

Norway’s national team, a favourite to win the women’s World Cup in

China this autumn.


It took Ole Gunnar Solskjær just 18 months to advance

from Norway’s second division to a place on the team at

Manchester United, one of the world’s most famous

soccer clubs.


Mr Solskjær’s career has had a fairy-tale touch, and he freely admitsthat playing for England’sManchester United is the dream ofhis life.

“Imagine being able to make a living by doing whatyou like best?” he says. “I sometimes have to pinchmyself and think about what’s happening to me.”

We have met following his recent cooperationagreement with Statoil (see separate article), atUnited’s ultra-modern Carrington training centre inthe countryside near Manchester.

Nobody gets in here without an appointment.Before the boom is lifted on a narrow road throughfields and over a small river, guests must identifythemselves and their errand.

Mr Solskjær went straight from playing as anamateur to one of the world’s best-known soccerteams.

“The club was interested in signing me up,” hesays. “I saw this as an opportunity which comesalong just once in a lifetime.

“Joining such a large and professional organisa-tion was obviously a special experience, but Igained a very good first impression. Everythingwas well organised, with a home and car quicklyprovided. The atmosphere was good and peopleeasy to get on with.”

He did not feel pressured by excessive expecta-tions. “They took me on as an unknown quantity. Ittook me six months to become a member of theteam on a more or less regular basis.”

The fairy tale began on a patch of open groundat home in the west Norwegian fishing port ofKristiansund, where Mr Solskjær played soccerevery day.

“It was a hobby to me – and a natural part of mydaily life,” he explains.

At the age of 16, he joined the A team in second-division club Clausenengen and scored 86Norwegian league goals over the following fouryears.

“I was with Clausenengen for a long time. It hada great atmosphere, and I stayed until I’d learnt allI could. We had a good coach, so the leap to Moldewasn’t that big.”

While at this west Norwegian club, he becamethe top scorer in the Norwegian premier league forthe 1995 season, with 20 goals to his credit.

Mr Solskjær also praises Åge Hareide, then theMolde coach, for inspiring him to advance a fewmore steps in his career. “He got me ready to tack-le new challenges at United.”

In his view, he has become an even better playerafter the move across the North Sea.

“When you’re associating daily with some of theworld’s best footballers, you naturally pick up a lot.These could be small details like how long youshould hold onto the ball and how to pass.

“You gain experience from being on a winningteam which achieves success through hard work. Ithas to be earned. You can never rest on your laurels.It’s the next match which counts.”

Mr Solskjær’s father is a keen United supporter,and videos all the team’s games – which takes careof the historical aspect on behalf of the family.

His greatest experiences so far include the 10days at the end of the 1998-99 season.

“That’s when we won the treble – first the Englishpremier league, then the Football Association (FA)cup, and then the European Champions Leagueagainst Bayern Munich of Germany.”

He clinched the European final in the last fewseconds of the game, with a toe poke which put theball into the top of the net behind German keeperOliver Khan. That sent United into ecstasies,while Bayern’s players lay exhausted on theground.

Mr Solskjær also scored in his debut for Unitedagainst Blackburn in August 1996: “That game wasa two-all draw. I had two-three chances at goal, andlanded one of them.”

Scoring goals is unquestionably an importantpart of his job. And the spectators certainly appre-ciate his ability to find the back of the net.

But soccer is a team game, and Mr Solskjær saysthat good colleagues are crucial for his success onthe field.

“Together, we’ve won the premier league fourtimes, the FA cup once and the Champions Leagueonce. The club has a lot of fantastic players.

“Eric Cantona, a teammate in my first few years,is a great footballer. So is Roy Keane, our pres-

Scoring goals is a key part of the job. (Photo: Erik Hannemann, VG)

Previously an amateur player, Mr Solskjær felt welcome at

Manchester United. Home and car were quickly provided. (Photo: VG)

L I N K S S P O N S O R S H I P

T E X T ragnar.as land@statoi l .com

P H O T O S Håkon Vold

Ole Gunnar Solskjær is a professional footballer with one of the world’s

biggest clubs. Soccer has made this 30-year-old from the west coast

port of Kristiansund perhaps the best-known Norwegian alive today..


ent captain. He’s a fine lad, who gives his all for theclub and shows a big will to win.”

Although competition for a place on the team istough, Mr Solskjær is pleased at the success whichhis fellow players have achieved.

“The team spirit and sense of comradeship arevery strong. Many of the others have grown uptogether and may have played together for years.Our boss, Alex Ferguson, also puts a lot of empha-sis on finding players who gel with each other.

“Having Mr Ferguson as my coach is somethingI’ll remember with pleasure all my life. I’ve learntan incredible amount from him, and have seen howhe works. He’s good at handling people and has aclear focus on the future.”

Mr Solskjær is conscious of his own hero status,and devoted plenty of time to a meeting with Statoil

employees and their children after a game atUnited’s Old Trafford in early December.

“I think it’s great to meet people who’re gen-uinely interested in soccer,” he says. “And I knowit makes a lot of them happy if I take the time tochat and give autographs.”

A similar attitude has been expressed by MrCantona, his former teammate.

“He’s said that meeting some of their favouriteplayers is a once-in-a-lifetime experience for mostpeople. You mustn’t disappoint them by hurryingaway.”

Asked what kind of model he wants to be forsoccer players and others of all ages who look up tohim, Mr Solskjær recalls his own interest in thegame as a young boy.

“I played, watched others and read about soccer,and I had my idols. But I haven’t been anyone but

myself over the years, and don’t see myself as hav-ing a special role.

“My self-confidence has grown and I’vebecome ever more familiar with the game. I hope alot of young people will go on playing soccer aslong as they enjoy it, and that those who want tomake a possible career in the game take one step ata time.”

Despite his status as a star player, he feels under nopressure to live up to people’s expectations or to hisimage as a nice fellow and every mother-in-law’sdream.

“I don’t see myself as some kind of shiningexample. But it’s naturally gratifying to know that alot of what I do can make other people happy.”

Mr Solskjær’s web site (which is in Norwegianonly) gets 300 000-400 000 hits every month.

A toe poke from Mr Solskjær won Manchester United the Champions League final against Bayern Munchen four years ago. The team got a hero’s welcome when it returned home. (Photo: AP/Scanpix)

People ask about everything imaginable, and heenjoys providing them with answers.

Many log on to congratulate him with a victoryand to send “well done” messages, while otherswant training tips. He tries as best he can to answerand give advice.

But he is less enthusiastic about other aspects ofbeing a celebrity, including the lack of anonymity.

“I don’t like it when my wife and son get pho-tographed on the beach during our holidays. I feelthat’s quite wrong. And I’m not keen on magazinearticles of the ‘at home with...’ type.

“What goes on inside the four walls of yourhouse is private. When I’m with my family, nobodyelse has any business there.”

On the other hand, he can walk down the streetin Manchester and visit the local supermarket withhis family without swarms of people wanting totalk to him or get his autograph.

“I don’t have any problems with that. Peopleoften just come up to me, clap me on the shoulderand say ‘well done’ after a game. I feel they’re gen-uinely pleased on my behalf.”

Mr Solskjær is also an ambassador for the UNChildren’s Emergency Fund (Unicef), which usescelebrities world-wide to draw attention to childliving standards in developing countries.

He is proud of this prestigious role, and regardsit as a mark of distinction to have been asked totake it on through United’s links with Unicef.

“My most important job is to explain to otherswhat Unicef stands for and what a fine job it does,”Mr Solskjær explains. “The organisation uses me inits promotional work, for instance.”

Together with some of his teammates, he hasbeen on a visit to Thailand.

“It was a real eye-opener to see conditions forchildren there, and how the work done by Unicefhas given disabled girls a new start in life.”

He tries to live up to the values and attitudesinstilled in him by his parents, who raised him todemand something of himself.

“I’ve given my all to get where I am today. Myparents have been role models. I’ve no time forpeople who sit in pubs and boast about how theycould be better footballers than others, but who’venever made the effort needed to prove it.”

It is too early to say whether his son Noah willinherit the same interest in soccer. But he accom-panies his father to games and wears a United strip.

For his part, Mr Solskjær takes as much pleasurein playing today as when he was a small boy. Hestarted developing his winner and competitiveinstincts early.

“When I was seven and played junior leaguesoccer, I didn’t like collecting a participant’s medalor diploma if we failed to win a tournament.”

Today, he is willing to let Noah beat him – at apinch.

His contract with United runs until 2005. Thatleaves him many games to play and trophies to win.But what he might do when his playing days areover remains an open question.

“Perhaps I might opt for a career in the oil indus-try,” he observes with a sly smile.

Onsidewith sportA number of collaboration deals withNorwegian cultural and sporting organisationsor individuals have been helping to strengthenStatoil’s image since the early 1990s. Soccerholds a key place in this programme.On the sporting front, the group currently hasagreements with the Norwegian FootballAssociation (NFF), the Norwegian OlympicCommittee and Confederation of Sports (NIF),and Manchester United’s Ole Gunnar Solskjær.

Statoil has collaborated with the NFF since1993, and its deal with this association wasextended for a further three years last autumn tothe end of 2005.

This also means that the group remains amember of the Team Norway group of NFFsponsors, and will continue to be the principalsponsor of the Norwegian women’s soccer team.

The latter is the reigning Olympicchampion from the Sydney games in 2000, andamong the favourites to win the women’s WorldCup in China this autumn.

Soccer currently ranks as the fastest-growingfemale sport both in Norway and internationally,and about 75 000 Norwegian women currentlyplay the game.

According to Fifa, the international footballfederation, more than 21 million female soccerplayers were registered around the world inJanuary.

The collaboration with the NFF means thatStatoil can promote its logo on arenas and dur-ing coverage of soccer matches on nationwideNorwegian TV channels.

Oddvar Høie, marketing manager forStatoil’s promotion and media unit, is very satis-fied with the NFF deal. He notes that it also rein-forces the group’s other sporting agreements.

The partnership with the NIF allows Statoil tosupport youth sports and the work done inNorway’s many sports clubs.

“We’re holding a draw twice a year for play-er shirts. These go to children and young peopleaged 13-16 who participate in team sports,” MrHøie explains.

“Sporting challenges are society’s chal-lenges’” observes Aina Sørhus, project managerfor sports sponsorship in the same unit. “Wewant to demonstrate our social responsibility bysupporting mass participation sports.”

A total of 5 000 player shirts were handed out

in two rounds during 2002. All clubs affiliatedwith the NIF which offer soccer, handball, vol-leyball, indoor bandy or basketball could apply.

The response to this offer was overwhelming,Ms Sørhus reports. Almost 4 000 people loggedonto the sponsorship section of Statoil’s web siteto read about the free sportswear.

Teams which were successful in the two 2002draws hailed from all parts of Norway.

At the same time, Statoil employees couldtake part in a draw for a complete sports outfitfor their own children, if these youngstersbelonged to organised teams in the sports listedabove.

Signed last autumn, the collaboration dealwith Mr Solskjær runs to the end of 2004 but canbe extended. It commits the striker to participatein Statoil promotions, from campaigns andadvertising to appearing at events.

Statoil employees, for instance, are able toattend home games at United’s Old Traffordground and to meet Mr Solskjær on the follow-ing day.

The soccer player is well known in Norwayand internationally, and represents a brand namein himself as a prominent media personality, MrHøie observes.

“He’s also a very good footballer with a pro-fessional attitude to his sport. He is known forhis wholesome values and has a positive image.”

The Norwegian women’s soccer team – literally backed by

Statoil.


Soccer has always been close to MrRefvik’s heart, but oil gained a big-ger place in his life. He made a markin both areas when passing throughStatoil on his way to an international

career. While helping to build up its oil tradingoffices in London and New York, he was involvedin establishing several soccer teams in the group forboth men and women.

The son of a fisherman, Mr Refvik grew up inpoor circumstances near Måløy in the county ofSogn og Fjordane. Godliness and thrift were impor-tant values.

In addition to Christianity’s regular 10 com-mandments, his father imprinted an eleventh on theboy – you must not boast about yourself.

“After my parents, soccer has had the biggestinfluence on my development and made me what Iam,” says Mr Refvik. “It taught me the huge impor-tance of functioning in a team.”

Getting an interview with the trader is not easy. Hekeeps a low profile.

“Come to New York by all means, but thenyou’ve got to talk to my bosses and colleagues,” hetold me with becoming modesty – and great hospi-tality.

Sitting in a restaurant near Times Square, wewatched 2002 end and 2003 begin. Hordes of peo-ple milled about outside, with the moving cars

weaving an energy-hungry carpet of light throughthe cold winter evening.

As an oil trader, Mr Refvik is not concernedsolely about what 2003 will bring. His thoughts arefocused even further ahead.

“We’ve already booked the first contracts for2013,” he told me.

That kind of long-term perspective calls for pre-dictability – but who can forecast what oil priceswill be in a week, a year or a decade?

“The answer lies in risk management,” MrRefvik explained. “One of the most importantthings we do at Morgan Stanley is to offer ourclients control and management of risk.”

With overall responsibility for energy, managingdirector Neal Shear is one of Mr Refvik’s superiors.He was a metals trader when the company decidedin the early 1980s to start trading crude and refinedoil, and became involved from the start.

With the dramatic oil market developments ofthe 1980s, clients needed assistance in managingthe big risks which came to be associated with fluc-tuating price trends.

The aviation industry offers a good example ofrisk management, Mr Shear suggested, since air-lines are heavily dependent on predictable fuelcosts.

Such predictability can be purchased for a week ora year ahead, and Morgan Stanley is one of theplayers which offer this kind of hedging.

“Let’s say an airline needs a stable fuel price ofUSD 1.20 per gallon for a week, a month, a year orseveral years,” Mr Shear told me. “We get it anappropriate deal.

“This means that the client pays USD 1.20whether the price goes up to USD 1.40 or falls to 90cents.”

That kind of hedging is all a matter of spreadingand sharing risk, he added. The market is competi-

tion-driven and transparent, which benefits the enduser.

The global oil trading system which used to pre-vail, with fewer players and long-term contracts,lacked the competitive element.

In a market which can sell many hundred timesmore oil than the physical volume ultimately deliv-ered, the marketplace becomes the focus of moreattention, greater transparency, increased analysisand stronger competition.

Oil is the world’s most important trade com-modity, and associated with high risk and capitalcommitment.

“The airlines are dedicated to carrying passen-gers quickly and efficiently,” Mr Shear observed.“They don’t have the capacity to accept the heavyrisk presented by fluctuating oil prices.”

Here Mr Refvik intervened in the conversation topoint out that risk management is important intoday’s energy market, but has both upsides anddownsides.

“Norway’s Saga Petroleum hedged part of its oilproduction at USD 12 per barrel in the late 1990s,”he recalled. “When oil prices rose sharply, this did-n’t exactly seem an outstanding decision. But thenSaga no longer exists either.”

He concurred with Mr Shear’s message andexamples: “When we trade aviation fuel at a fixedprice for a client, we hedge by trading other oilproducts. Our aim is to maintain a balanced energybook at all times.”

At work, Mr Refvik sits in the centre of a bigroom filled with electronics and alert traders. Whenhe finally strolls into a vacant office, he explainsthat the trading floor is his life.

Not for him an office of his own. He is not con-cerned with the status it might confer, but is wellaware of the distance created between a cubbyholeand the seething life of the trading room.


Playing thetrading game

As a small boy, Olav Refvik learnt how to be a team player on the

soccer pitch in a small west Norwegian community. He now plays

in the world oil market’s premier division as a managing director

at Morgan Stanley. Few Norwegians have enjoyed a bigger career

in the international oil industry.

L I N K S T H E I N T E R V I E W

T E X T b jorn.vidar . leroen@statoi l .com

P H O T O S Ørjan El l ingvåg

Olav Refvik is managing director for crude oil and product trading at

Morgan Stanley, the global financial services company. The 44-year-old,

who is married, has six children and now lives in Connecticut, began his

career in Statoil..


Mr Refvik’s word is his bond. His whole imageis built on openness, integrity and trust. They saythat when he began trading oil in New York, a 16-page contract was usually written for each deal. Butthe young Norwegian took a different approach.

Players in the market learnt to trust him. They hadno need to write contracts all the time, which reducedthe amount of paper around him. And this in a mar-ket where it is difficult to make a name for oneself.

“I suppose I must admit that I’ve managed toearn respect despite being a foreigner in the USA,”he eventually admitted.

In his view, it is important to think of the clientand establish a good relationship right up to theenergy end-user.

“I think that depends on never starting the day atwork by asking how much you can make for your-

self. After the frightful examples of egotism andbreach of faith we’ve witnessed, personal attitudesand values are set to become more important inbusiness.

“That’ll make those of us who build on ethics,honesty, transparency and loyalty more attractive –and competitive.”

He can look back on over two decades in the oilindustry, having joined Statoil in 1981 straight fromthe Norwegian School of Economics and BusinessAdministration in Bergen.

Initially working on finance and planning, he gotthe opportunity in 1984 to help build up oil tradingin the group. That proved decisive for the youngeconomist.

“I’ve been extremely lucky and very privileged,”he commented when looking back.

He noted what a fantastic opportunity was hand-ed to him as an economics graduate by joiningStatoil, which quickly expanded into Norway’slargest and most important company.

What makes a good oil trader is something MrRefvik has asked himself for many years.

“The simplest answer I’ve come up with iscuriosity. This business challenges your head, yourguts and your heart - for analysis, instinct, and thejoy in and love of the job respectively. You need allthree to succeed.”

He moved to New York as a Statoil oil trader in1987, having already spent some time in London.After three years with the group in the USA, hedecided against returning to Norway.

An offer to join Morgan Stanley in 1990 proved

too tempting. His new employer gave him the job ofbuilding up its trading business with oil products.

His present post puts him in charge of 35 staff,who represent 10 nationalities and 12 religions.That makes big demands on team leadership skills.

In addition to its head office in New York, thefinancial services group has oil trading operationsin London and Singapore.

“Olav’s built up an organisation which aims toget as much as possible out of a barrel of oil, and isnotable for his grasp of every detail affecting the oilmarket,” says trader Mark Cain.

Such knowledge does not come of its ownaccord. People have to be early birds to get the mostworms, and must stay in good physical shape to sur-vive the frenetic pace.

Mr Refvik visits the gym in Morgan Stanley’sBroadway building three times a week. And he usu-ally leaves home at 05.30.

He reads the morning papers on his one-hourtrain ride from Connecticut to Manhattan. At theoffice, he picks up international news on the inter-net – including the Norwegian press.

“Keeping abreast of the latest developments isessential in my job,” he told me.

His focus is on everything which might conceiv-ably influence the global energy market – so he hasthe Norwegian oil minister on his radar screenalongside George Bush and Saddam Hussein.

Mr Refvik expects natural gas to take over muchof the dominant role currently held by crude in theworld market for energy.

For that reason, he believes it would be unwise

to link gas and oil prices because demand for theformer is set to increase.

And he sees many dangers in the USA – theworld’s largest energy consumer – which couldspark fresh crises in this field.

“When we had the big debate on America’senergy position following the heating oil crisis in2002, proposals to speed up the conversion from oilto gas won great attention.

“That’s a hopeless discussion, because increasedUS dependence on gas will boost prices andencourage new crises – simply because gasresources in America are limited.“

On the other hand, he finds it difficult to under-stand how Norway – as a major gas exporter toEurope – could find itself with a major electricitycrisis during the past winter.


Pho

to:

Sam

foto

The CTour solution has helped to convinceresearchers in Statoil that they can hit theclean-up target set for discharging wastewater to the sea by the government’s tightdeadline.

Tests on the group’s Statfjord B platform in theNorth Sea show that this technology can removemore than 80 per cent of oil and chemical residuesfrom produced water.

Other approaches to cleaner discharges whichare currently attracting attention include findingless environmentally-harmful replacements forchemicals used offshore.

Keeping the sea clean is a key requirement forStatoil. And despite almost 40 years of offshoreoperations on the Norwegian continental shelf(NCS), these waters remain generally unsullied.

A recent report from Norway’s joint govern-ment-industry environmental forum concluded thatpollution on the NCS is well below the assumeddanger line for marine life.

Weight is given to this finding by the forum’smembership, which includes the Norwegian OilIndustry Association (OLF), the Norwegian Unionof Fishermen, green campaign group Bellona, theNorwegian Pollution Control Authority and theNorwegian Institute of Marine Research.

Produced water emerging from the reservoirtogether with oil and gas represents the most impor-tant source of potentially polluting discharges to thesea by the offshore industry.

This water is separated out on the productioninstallations, treated to remove residual oil andchemicals, and released to the sea.

The challenge presented to Statoil by producedwater is huge, particularly on its mature North Seafields such as Statfjord and nearby Gullfaks.

It is a long time since water exceeded the shareof oil in the Statfjord wellstreams. Daily crude out-put from this field has fallen from a peak of rough-

ly 800 000 barrels to 200 000, which is accompa-nied by almost a million barrels of water.

The latter is simply returned below ground onsome fields. But any water which has to be dis-charged must be properly cleaned, and varioustreatment methods have been adopted by Statoil.

Continuous efforts are nevertheless being madewithin the group to find optimal solutions for eachof its fields, and this drive underlies the develop-ment of CTour.

A long-term test of the technology is now beingconducted on Statfjord B, reports process engineerPer Gerhard Grini. He is responsible for Statoil’sresearch into mature field production.

This trial aims to treat about 313 barrels (50 cubicmetres) per hour, and is being paralleled by effortsto implement the method in parts of the C plat-form’s process plant.

“CTour could take us a long way in the rightdirection,” says Dr Grini. “It is effective, with theequipment cheap to both install and operate.

“More testing is needed, but this could be thesolution we select for Statfjord as a whole. It’s alsohighly relevant for other fields in the longer term.”

The Norwegian authorities currently demandthat water released by the offshore industry shouldcontain no more than 40 parts per million (ppm, orabout a milligram per litre) of oil residues.

Statoil already keeps well within that ceiling,and seldom exceeds 20 ppm. But CTour makes itpossible to get this content as low as three-fourppm.

Dr Grini explains that the method involvesinjecting the produced water with a condensed gaswhich works as a detergent, and passing the mixthrough a hydrocyclone.

This device uses a centrifugal process to separateout the condensate again. Oil and chemical residuesattach to that substance and are removed along with it.

So a platform must have hydrocyclones installed

to use the system. Such equipment is found on allthree Statfjord installations, but cannot get residuesbelow 15-20 ppm on its own.

The industry is also working continuously toidentify more environmentally benign replacementsfor chemicals used in drilling, downhole workingand production, says Ståle Johnsen.

With a doctorate in environmental chemistry, he isresponsible for Statoil research programmes relatingto health, safety and the environment (HSE).

More than 1 000 different chemicals are used off-shore, but roughly 90 per cent of the substances dis-charged from Statoil’s fields are regarded as non-hazardous.

Another nine per cent are defined as environmen-tally acceptable, with only 0.5 per cent presenting achallenge. This last category includes corrosioninhibitors.

But even non-hazardous substances can be harm-ful in large quantities. One example is hydrogen


SHOOTING FOR

ZEROA new water treatment solution promises to help Statoil reach an

ambitious goal of eliminating environmentally-harmful discharges

from offshore platforms in less than three years. It is one of several

technologies now being fine-tuned to reach this objective.

L I N K S T E C H N O L O G Y

T E X T al ice.o.bore@statoi l .com

P H O T O oyvind.hagen@statoi l .com

Statoil is committed to meeting the Norwegian government’s target of

zero harmful discharges to the sea by the end of 2005. Offshore oper-

ators in Norway are spending heavily to develop cleaner technologies.

sulphide (H2S) scavengers, essential on some fieldsto keep wells and pipelines open.

“These chemicals are not basically hazardous, butare used in such big volumes – on Gullfaks, forinstance – that they pose an environmental risk,”explains Dr Johnsen.

Several approaches are being pursued by Statoilto reduce the pollution risk posed by scavengers andcorrosion inhibitors, including both volume cutbacksand replacement.

In addition, the group is seeking better environ-mental data on chemicals and technology whichmakes the compounds more efficient and therebyallows their consumption to be reduced.

“Our environmental impact factor (EIF) toolallows us easily and regularly to calculate the poten-tial effect of discharges,” Dr Johnsen notes. “That’sa big help in prioritising measures.”

He explains that the EIF is a computer modeldeveloped by Statoil in cooperation with severalother companies to reflect the environmental statusof the sea around offshore installations.

It compares the level and composition of dis-charges with the carrying capacity of each sea area,and has now been adopted for all Statoil fields on theNCS.

The model indicates which chemical substancesin a given discharge enhance the threat of environ-mental harm, and how big that risk is for the wholedischarge.

Measuring such risk with a view to reducing itforms another prong in Statoil’s strategy for reachingits goal of zero environmentally-harmful dischargesby the end of 2005.

“Field measurements from our environmentalmonitoring programme give no indication that pro-duced water released from our operations harms themarine environment,” says Dr Johnsen.

“But such data give no guarantee that damagewon’t happen. We feel we’re on reasonably safeground, but might naturally be concerned about thehuge volumes of water being discharged.

“We can’t simply sit back and be satisfied withthe present position. Our aim is to reduce even fur-ther the risk that discharges could have harmfuleffects.”

Production chemicals are one of three categories ofsubstances found in discharged water, the othersbeing oil residues and dissolved oil components suchas aromatics and alkyl phenols.

Dr Johnsen emphasises that research in this areamust reflect natural conditions. Sea motion, waterdepths and fish movements are very important forthe possible impact of discharged substances.

Measurements in the sea around offshore installa-tions naturally provide a more accurate picture thanlaboratory tank trials.

While chemicals long presented the biggest chal-lenge, the steady adoption of “green” replacements

means that the dissolved components are now themain headache.

Some of the alkyl phenols are designated as hor-mone inhibitors because they have the same effectas hormones on marine organisms and can therebyreduce reproductive ability.

“However, the alkyl phenols most commonlyfound in produced water are easily biodegradable inseawater over time and have no hormone inhibitingproperties,” explains Dr Johnsen.

“The types which have been found to displaysuch properties are present in very small quantities.All the same, the precautionary principle requires usto pay full attention to these invisible substanceswhen lots of water is being released.”

This is where CTour comes in again. Dissolvedcomponents are not removed by straight hydrocy-cloning, but up to 80 per cent of them can bestripped out using the new technology – with theright condensate quality and the method fine-tunedto the process involved.

“The best solution of all would obviously be toinject all produced water back below ground, partic-ularly where this could help to drive out more oil,”says Dr Grini.

But he notes that injection normally requirespower, which in turn releases more carbon dioxideto the air. So a total assessment must always bemade.

Injection is being pursued or planned on a num-


ber of Norwegian offshore fields, he adds. But thisprocess boosts reservoir pressure.

On Statfjord and other mature producers, theneed is actually to get that pressure down in order torecover the large volumes of condensed gas whichsuch fields contain.

The only possibility for employing injection inthese conditions will be if it can use sub-surface for-mations other than the reservoir.

Statoil’s Kvitebjørn development in the North Seawill serve as an environmental model when it comeson stream in the autumn of 2004.

Produced water and drill cuttings are to be pumpedback below ground with the help of reservoir pres-sure, which eliminates discharges to the sea and keepsdown emissions to the air.

All Norwegian offshore field operators are requiredto report to the authorities by 1 June on their strategiesfor reaching the zero harmful discharge target.

Following a recent White Paper on protecting theriches of the seas, the Ministry of Petroleum andEnergy launched a drive to boost knowledge aboutthe long-term impact of offshore discharges.

This project is being pursued jointly by theResearch Council of Norway, the OLF and the gov-ernment.

According to Dr Grini, Statoil and the rest of theindustry have also devoted substantial resources tothis area over a long period.

“We’re taking the lead and have managed to finda number of good solutions. But we still face difficultissues, particularly on fields in the late productionphase. This work takes time.”

Dr Johnsen has registered great interest in the EIFacross the industry, and sees it as an important contri-bution by Statoil and its collaborators to the jointeffort to reduce harmful discharges.

The group is now concentrating on developing thistool even further. Two new variants are on the way –to measure drilling-related releases and acute dis-charges respectively.

Ensuring synergies between the industry’s effortsand publicly-funded research will be important infuture, Dr Johnsen emphasises.

He hopes that this can establish a good overviewof the position relating to discharges, in order toimplement the right countermeasures.

“We and the authorities are pursuing the samegoal, and we’re working systematically on strategiesfor all our fields,” he comments.

“Although the 2005 target remains a big chal-lenge, we’re optimistic. But we see no discharges atall as unrealistic. That might become a reality on newdevelopments, but many producing fields are whollydependent on being able to release water.

“However, we’ll be making sure that such dis-charges don’t present any threat to marine life.”


The wellstream is separated on the platform, with the oil going

into storage tanks and the cleaned water discharged to the sea.

(Illustration: Even Edland)


Stat

us Good results reported by Statoil for 2002 reflect

more efficient production operations by the group

and its highest-ever annual output of oil and gas.

"We're delivering higher production while simul-

taneously enhancing our efficiency," commented

chief executive Olav Fjell when last year's figures

were presented in February.

"That's bound to yield a good outcome. Our

results place us among the industry's best per-

formers in terms of profitability."

Statoil's oil and gas production in 2002 aver-

aged 1 074 000 barrels of oil equivalent (boe) per

day, which represents a seven per cent increase

from the daily 2001 average of 1 007 000 boe.

Mr Fjell noted that the group strengthened its

gas position during the year.

"We made progress in the UK gas market, which

is the biggest in Europe, and gas sales also rose

markedly because we're still in the build-up phase

for our long-term contracts."

Statoil passed important milestones in its inter-

national exploration and production operations dur-

ing 2002.

"It's particularly gratifying that we secured our

first operatorship in Iran and strengthened our posi-

tion in Venezuela," Mr Fjell observed.

"Equally pleasing is the great progress made in

Azerbaijan, which has long been an important area

for us. And exploration results off western Africa

were positive."

Operations on the Norwegian continental shelf

also yielded good results.

"We set a production record on the NCS," Mr

Fjell reported. "A five per cent increase in output

reflected high regularity. At the same time, our oper-

ations became even more efficient."

Downstream activities faced difficult market

conditions during 2002, but Mr Fjell was well satis-

fied with the big progress made in results towards

the end of the year.

He called particular attention to a strengthening

of Statoil's position in important markets such as

Poland and the Baltic states, and the successful

sale of the Navion shipping arm.

Health, safety and the environment presented a

mixed picture during 2002, Mr Fjell noted.

"The figures for personal injuries and serious

incidents showed positive progress, but we suf-

fered six fatalities in connection with our business.

That's six too many."

Statoil has accordingly instituted additional

measures to ensure that its operations become

even safer.

The group achieved a net profit, adjusted for

special items, of NOK 16.7 billion as against an

adjusted NOK 15.2 billion the year before.

Statoil's annual report and accounts are due to

be published on 27 March.

Performed well in 2002


New operatorshipin Venezuela

Long-term contracts worth about NOK 1.5 billion secured

by Statoil in Japan and China mark a breakthrough for the

group's sales of liquefied petroleum gases to Asia.

A total of 600 000 tonnes of LPG have been sold

under three deals, including 400 000 tonnes for Japanese

industrial group Mitsui.

A further 100 000 tonnes is being taken by Japan's

Marubeni, while ChevronTexaco subsidiary Caltex is buy-

ing 100 000 tonnes for delivery to China.

Consisting primarily of butanes and propane, LPG finds

applications in cooking, heating and public transport.

Japanese LPG carrier Mushashi Gloria lifted the first

43 000-tonne consignment from Kårstø north of

Stavanger in January for delivery in Japan 30 days later.

"These contracts are the result of resolute work over a

long period to secure acceptance of the Norwegian export

quality in Asia," says senior trader Nils Eivind Breivik.

Such efforts include shipping Japanese analysis equip-

ment to Kårstø in order to check quality in line with meth-

ods accepted in Japan.

Mr Breivik regards Japan and China as the world's

most important import markets for LPG.

He also believes that Statoil has gained a strong posi-

tion globally with this commodity through the group's

access to large volumes, unique infrastructure and able

trading organisation.

Norway ranks as the world's third largest exporter of

LPG after Saudi Arabia and Algeria, with Statoil responsi-

ble for the majority of the country's sales.

The group's share of these exports totals about five

million tonnes per annum, delivered from Mongstad near

Bergen. These plants have big storage facilities and mod-

ern ports.

Breakthroughwith LPG in Asia

Boosting recoverywith foam

Foaming agents are to be tried out by Statoil on its Statfjord

field in the North Sea in a bid to improve oil recovery from

this reservoir.

Injection of such substances has previously been test-

ed on Snorre, which lies in the same area and transferred

to Statoil operatorship at the New Year.

"Very promising results have been achieved on Snorre

with this solution," explains Tone Botnen, senior reservoir

engineer in Statfjord's reservoir exploitation sector.

"One of its wells produced about 1.5 million barrels of

extra oil during the trial, at a cost of NOK 10 million. And

Snorre's reservoir properties are similar to those found on

Statfjord."

The foam-assisted water alternating gas (Fawag) tech-

nology is based on adding a foaming agent to the water

being injected into the field.

When gas is subsequently injected, foam blocks the

pores of the reservoir rock. This forces the gas into new

parts of the formation to displace oil towards the produc-

tion wells.

"We've initiated a pilot well on Statfjord B, and have

plans for a second one," Ms Botnen reports. "It'll take

about a year to see whether results live up to expecta-

tions."

Statfjord's injection system was converted in the late

1990s from water alone to water alternating gas (WAG).

This represents a precondition for using Fawag.

The technology is simple to use, has low investment

and operating costs and releases no environmentally-harm-

ful substances, with the foaming agent adsorbed in the for-

mation.

The operatorship for block 4 in the Plataforma Deltana

area off eastern Venezuela has been awarded to Statoil.

Covering about 1 435 square kilometres, this acreage

lies in 200-800 metres of water.

Statoil submitted a winning bid for the block in

December, with a signature bonus of USD 32 million.

It has committed to drilling three exploration wells

over the next four years at an estimated cost of USD 60

million to define the resource potential of the area.

“We’ve worked closely over many years with

Venezuela’s Ministry of Energy and Mining, state oil com-

pany Petóleos de Venezuela and a wide range of supply

and service companies,” says Richard Hubbard, execu-

tive vice president for International Exploration &

Production.

“We’re looking to continuing these relationships as

we move ahead together on Plataforma Deltana.

“With our joint success, this project can make a sig-

nificant contribution to Venezuela’s offshore industry

development.”

Statoil currently has interests in two Venezuelan pro-

duction licences – 15 per cent of the Sincor heavy crude

project in the Orinoco Belt and 27 per cent of the LL652

oil field in Lake Maracaibo.

The Plataforma Deltana assignment is the second

international operatorship secured by Statoil in recent

months, following phases six-eight on Iran’s South Pars

gas field (see page 46).


Statoil and Iran's Petropars signed a participation agree-

ment in October relating to the South Pars gas develop-

ment in the Persian Gulf.

This gives the group a share of up to 40 per cent in,

and the operatorship for, the offshore part of phases six,

seven and eight in the project.

The deal reflects Statoil's strategy of international

upstream expansion. As part of this process, it has opened

new offices in Brazil, Mexico, Saudi Arabia and Iran over

the past two years.

Marking the group's first development contract in the

Middle East, the South Pars venture accords with a

Norwegian foreign policy goal of encouraging trade rela-

tions with Iran.

The deal came into force in November, when Statoil

took over the operatorship. Work will extend over the four

years, with the group’s capital commitment during this

period totalling USD 300 million.

The group’s investment and return will be covered from

the sale of condensate and liquefied petroleum gases

(LPG) over a four-year period from the start of production.

This will be in late 2004 under current plans, and

Statoil regards the project as attractive and robust.

The field will be developed with three offshore wellhead

platforms linked by the same number of pipelines to a

land-based gas treatment plant.

Production capacity will be 100 million standard cubic

metres (scm) per day, with 80 million daily scm of gas

being exported to other Iranian oil fields for injection as

pressure support. The remaining condensate and LPG will

be sold.

Petropars is to act as operator of the development proj-

ect for the land-based gas treatment facilities.

Established in 1998, this company is involved in six of

the first 10 phases awarded for the development of the

giant South Pars field, as either partner or operator.

Petropars is owned 60 per cent by the National Iranian

Oil Company (NIOC) and 40 per cent by IDRO, an organi-

sation under the Iranian Ministry of Industry.

Iranian assignment secured

Many small finds Eight new oil and gas discoveries were made on the

Norwegian continental shelf in 2002, with Statoil as opera-

tor for six and a partner in the other two.

Contained in figures from the Norwegian Petroleum

Directorate (NPD), these exploration results compare with

12 finds the year before.

"Many of the 2002 discoveries were small," observes

Tor Fjæran, senior vice president for new areas in

Exploration & Production Norway.

"This underlines the fact that the NCS is a mature

region, and that we need access to attractive new explo-

ration acreage."

Statoil was operator for three oil, one gas and one

oil/gas discoveries in the Tampen area of the North Sea,

and an oil find in the Norwegian Sea.

Taking account of sidetracks, which are not included in

the NPD statistics, the group made discoveries in 10 of its

15 wells. This gives a discovery rate of 67 per cent.

"We still have faith in the NCS, although expectations

for the deepwater parts of the Norwegian Sea have been

downgraded somewhat in the wake of drilling results for

2002," says Mr Fjæran.

He hopes that new offshore licence awards this year

and next will help to boost exploration activity and yield

more larger discoveries.

The exploration drilling programme on the NCS in 2003

is expected to total 15 wells.

Operator responsibility for Snorre, Visund, Tordis and

Vigdis in the Tampen area of the Norwegian North Sea

passed from Norsk Hydro to Statoil at midnight on 31

December 2002. The two companies had prepared for the

change-over since the summer of 2000.

It made Statoil the only operator in the Tampen area,

which also includes Statfjord and Gullfaks as well as a

number of subsea satellite developments.

A million barrels of oil equivalent are delivered every

day from this area, corresponding to 28 per cent of total

Norwegian offshore output.

The hand-over also brought Statoil 550 new employ-

ees, including about 250 employed offshore on Snorre A

and B as well as the Visund platform.

Just under 50 Visund personnel will be moving into the

group's Sandsli offices outside Bergen.

At the same time, 200 new colleagues – mostly

attached to the Snorre organisation – joined existing

Statoil staff in Stavanger.

And about another 50 people have been incorporated

in other entities, such as corporate services and central

staff functions, at various Statoil offices in Stavanger.

The operatorship changes were agreed in connection

with Hydro's acquisition of Saga Petroleum in 1999.

Operatorships transferred


A process to fill the first 40 permanent jobs in the opera-

tions organisation for Statoil's Snøhvit field in the Barents

Sea began in January, with the full workforce due to be in

place by 2005.

Operating the gas liquefaction plant and other facilities

at Melkøya outside Hammerfest in northern Norway will

require about 175 permanent employees.

Of these, 120 will be chemical, process and automation

technicians, electricians and industrial mechanics. A further

25 people are required for offshore-related operations.

The final 30 jobs involve key administrative staff, disci-

pline leaders and other experienced operations personnel,

reports Snøhvit personnel manager Grete Varhaug.

"We're now going to appoint 40 people who're due to be

in place by the end of the year," she explains. "The remain-

der will be hired in 2004.

"Operations personnel will follow the subsea field devel-

opment and construction of the Melkøya facility as well as

established qualification programmes ahead of the start to

production."

The staff build-up will also parallel the handover process

at the land plant, so that the organisation is in place, trained

and ready to start operation when the plant is completed in

late 2005.

Statoil's aim is to recruit as many employees as possi-

ble from the local area and the rest of northern Norway, Ms

Varhaug explains.

This will provide the greatest continuity in the workforce

and thereby help to achieve good operating results.

Both young newly-qualified personnel and experienced

technicians are required. Statoil is also hoping that a large

number of well-qualified people will apply for the engineer

jobs.

The Snøhvit project embraces Europe's first full-scale

production and export facility for liquefied natural gas (LNG).

It also ranks as Norway's first complete field develop-

ment without offshore surface installations. Production is

due to start in 2006.

Snøhvit recruitment starts

Statoil acquired the development rights in December for an

underground gas storage facility to be built at Aldbrough on

the east coast of England.

This acquisition follows an agreement to buy all of the

shares in the Aldbrough Gas Storage Company Ltd from

Intergen, a company owned jointly by Shell and Bechtel.

The new facility will act as a buffer against possible ter-

minal interruptions, and will provide additional security of

supply for Statoil's gas deliveries to the UK market.

In addition, the facility's rapid injection and withdrawal

capability will support the group's UK gas trading activities.

A total of three underground salt caverns are to be pre-

pared to receive 170-230 million cubic metres (six-eight bil-

lion cubic feet) of gas.

This will involve the construction of an eight-kilometre

gas pipeline connection tied into Britain's national trans-

mission system, a power line connection to the Yorkshire

Electricity distribution network and a seawater leaching

system.

Plans call for everything to be ready for operations to

start in 2007.

"This facility will provide us with a back-up for our gas

deliveries from the Norwegian continental shelf," says vice

president and project director Mike Kelly at Statoil UK.

"It also gives us a useful trading tool to enhance the

value of our gas portfolio."

Gas is currently supplied to the UK via the Vesterled

trunkline from the Heimdal platform in the North Sea and

the Frigg pipeline to the St Fergus terminal in Scotland.

Deal done onUK gas storage

Navion sold toTeekay Shipping

The Navion ASA shipping company wholly owned by

Statoil was sold in December to Canada’s Teekay

Shipping Corporation.

"We’re very pleased to have entered into this trans-

action with Teekay," said Erling Øverland, executive vice

president for Statoil's Manufacturing & Marketing busi-

ness area and chair of Navion.

“I’m confident that Navion, under its ownership, will

continue to deliver first class services to both Statoil and

its other customers.”

The net sales price is approximately NOK 6 billion in

cash. With the transaction effective from 1 January

2003, closing is expected in the second quarter of 2003

at the latest. Navion's present board and president will

remain until then.

"We achieved a fair price with Teekay – a company

with a proven record in safety, service and quality, glob-

al reach and financial strength," adds Mr Øverland.

“Teekay has expressed a commitment to further

develop the competent Navion organisation in Stavanger

which will be the main operating office for Teekay in

Norway.”

"We are proud to have been chosen as the long-term

global shipping partner of Statoil," says Bjørn Møller,

president and chief executive officer of Teekay.

"There’s a great fit between Statoil and Teekay, both

in terms of operating philosophy and growth ambitions.

Navion complements our existing business and enables

us to expand our offer of services to our global customer

base, for example, through its broader involvement in

the product tanker trades."

Navion is a Norwegian shipping company of a sub-

stantial international size, the worldwide market leader

in offshore loading and a leading regional conventional

shipping company.

With more than 20 years' experience in offshore load-

ing, it has developed cutting edge technology and con-

cepts within this area.

Navion operates a fleet of 26 shuttle tankers, two

storage vessels, 12 crude tankers, nine product carriers

and one gas ship. Based in Stavanger, it employs some

100 people.

Teekay Shipping Corporation is a leading provider of

international crude and petroleum product transportation

services through the world's largest fleet of medium-

sized oil tankers.

With its operational headquarters in Vancouver,

Canada and offices in 11 other countries, it employs

more than 4 100 seagoing and land-based staff around

the world.

The company has earned a reputation for safety and

excellence in providing transport services to oil compa-

nies worldwide.

Sulphur has long been unwanted in oilproducts because it causes environ-mental and health problems, andthereby creates a negative image formarketing.

Over the past 25 years, governments, environ-mental organisations, consumer groups and the oilindustry have ensured that petrol contains less andless of this pollutant.

The current target is to make petrol “sulphur-free”, defined as containing less than 10 parts permillion (ppm) of the substance.

This means that a fuel tank holding 70 litres ofpetrol would contain 0.5 grams of sulphur. No spe-cific plans exist for complete elimination, whichwould be virtually impossible.

Statoil is now in the process of completing aninvestment programme at Mongstad which allowsthis facility to produce nothing but sulphur-freepetrol if required.

And its Kalundborg refinery in Denmark willsimultaneously be able to convert all its petrol out-put to this quality.

Similarly, a significant part of petrol output fromthe group’s part-owned Pernis refinery inRotterdam will be sulphur-free up to 2005, when allproduction there can also be converted.

The upshot is that Statoil’s own facilities will beable to meet all its Scandinavian requirements forsulphur-free petrol by the spring.

A transition to this product will occur in linewith market demand, and when the price which can

be obtained for it justifies the improvement in qual-ity.

Sulphur is a component of crude oil. So NorthSea crudes, which are “sweet” (low sulphur), havean environmental edge over “sour” (high sulphur)grades from other parts of the world.

Reducing the proportion of this substance duringthe refining process has been encouraged in partthrough legal prescription and tax incentives.

Companies able to produce or secure “sweet”products and use this in their marketing also have acompetitive edge, while consumers have set maxi-mum sulphur levels for some applications.

In consequence, refineries have invested billionsin desulphurisation plants. “Sweet” products nor-mally cost most than “sourer” versions.

Tax differentials have ensured a good return fornational refiners making such investments in cer-tain markets where the availability of a local quali-ty is limited. Sweden provides a case in point.

In larger, open markets where the authoritieshave only set maximum limits, prices usually risefor a limited period until a balance between supplyand demand is restored.

This generally means that refiners are unable toachieve a fully acceptable return on their desul-phurisation investment.

Nevertheless, not investing is out of the questionsince this might mean being unable to deliver –which could lead in turn to closure of the refinery.

Statoil currently produces 14-15 million tonnesof refined products per year from the Mongstad,Kalundborg and Pernis facilities.

All three have invested heavily in improving theenvironmental quality of their output – including areduction in sulphur content.

In response to the poor air quality in majorEuropean cities, the EU launched a drive in 1988for standard petrol specifications among its mem-bers. This was followed by common limits for vehi-cle fumes.

Cars sold in the various west European nationsare largely the same makes, but petrol specifica-tions have long been and remain different fromcountry to country.

Variations based on climatic changes from northto south are natural enough. But it would simpli-


GETTINGThe Mongstad refinery operated by Statoil near Bergen will

be able to supply all its petrol sulphur-free by this spring –

two years before such fuel must be available throughout the

European Union.

SWEETER

L I N K S M A R K E T F O C U S

T E X T le i f .gustav.hol lund@statoi l .com

P H O T O S Odd Inge Worsø,

oyvind.hagen@statoi l .com

The author heads product sales and supply in Statoil’s oil trading and

supply cluster. His entity handles sales by the group’s European refiner-

ies and supplies its marketing operations in Norway, Sweden, Denmark

and Ireland.

SULPHUR CONTENT IN PETROL (PPM)

Norway 150 No change decided before 2005Sweden 50 No change decided before 2005Denmark 150 No change decided before 2005Finland 50 No change decided before 2005Ireland 150 No change decided before 2005Germany 10 Sulphur-freeUK 50 Considering sulphur-free from 2003-04Netherlands 50 Considering sulphur-free from 2003-04Switzerland 50 Sulphur-free from 1 January 2004USA 300-1 000 Reducing to 30-80 in 2006

Sulphur content in some important petrol markets

fy the market if common ceilings were imposed forpollutants in petrol, such as sulphur.

On the other hand, the many specifications offercommercial and optimisation opportunitiesbetween markets for companies with flexiblerefineries. Mongstad, for instance, produced about60 different petrol qualities in 2002.

The composition of vehicle exhausts is deter-mined by engine design, the catalytic converter fit-ted and the quality of the petrol used.

Most people are aware that sulphur emissionsare harmful to both health and the environment. Butthey also reduce converter efficiency.

A controversy accordingly raged throughout the1990s between carmakers and oil companies overwho should bear the cost of reducing pollution frompetrol-driven cars.

Either refiners had to pay through maximumcleaning of the fuel, or the automotive industrywould be forced to fit their cars with very advancedengines and complex converters.

New EU regulations on limiting pollutants inexhaust fumes from petrol-driven cars, which comeinto effect in 2005, greatly reduce permitted emis-sions of nitrogen oxides.

Combined with demands for lower fuel con-sumption to cut the amount of carbon dioxidereleased, this requires an engine technology whichoperates with excess air during combustion.

That in turn will demand converters with anextremely low tolerance to sulphur if they are tofunction satisfactorily.

So the upshot is that ensuring the best possibleair quality calls for petrol to be upgraded in additionto improving engine and converter design.

Through a series of intermediate phases, it isnow clear that sulphur-free petrol must be availablein all EU countries from 2005.

However, member states are free to introducetax incentives at an earlier stage in order to stimu-late the sale of “sweet” fuel.

The refining industry has estimated that it willneed to invest some EUR 10 billion if all petrolfrom every European refinery is to be sulphur-freeas currently defined.

Germany adopted tax differentials on 1 January

2003 which mean that anyone selling petrol con-taining more than 10 ppm of sulphur must pay addi-tional duty.

The latter amount is intended to be higher than theestimated additional cost of producing or buyingsulphur-free petrol to sell at German service sta-tions.

Other countries are also considering the intro-duction of similar schemes before 2005.

Statoil ranks as a large petrol producer from itsthree refineries, with some 4.2 million tonnes at itsdisposal every year.

Since annual consumption in Norway, Sweden,Denmark and Finland is about nine million tonnes,Statoil can meet about 50 per cent of demand inthese four Nordic nations.

Partly in collaboration with other players inNorway, Statoil has indicated that it is interested inconverting to sulphur-free petrol in the domesticmarket.

Through a dialogue with the Norwegian author-ities, the group has sought to achieve differentiatedtaxes which could cover the additional cost alongthe lines followed in Germany.

So far, the authorities have been reluctant to helpencourage a switch to “sweet” petrol in the domes-tic market.

European production capacity for petrol out-strips local demand, and prices and volumes inEurope are largely determined by the US balancebetween supply and demand.

The Americans consume more than 40 per centof the world’s petrol and import a proportion oftheir requirements.

Statoil ships between 500 000 and one milliontonnes of petrol annually from Europe to the USA.These supplies have so far come largely fromMongstad, but also from purchases in Europe.

They are primarily sold via the group’s US trad-ing office in Connecticut to American oil compa-nies.

Exports to the USA have so far provided afavourable market for that part of Mongstad’s out-put which is relatively high in sulphur.

From the second quarter of this year, however,

all petrol from the refinery will be able to competein every low-sulphur and sulphur-free market –inside and outside Europe.

Germany resolved to introduce a differential taxso early that national suppliers have had time toprepare their refineries for such production.

Plants in the former East Germany are particu-larly well placed, and have partially replaced petrolimports via Hamburg – a natural delivery point forStatoil.

On the other hand, Germany is largely suppliedfrom Rotterdam by pipelines and Rhine barges. TheDutch port remains Europe’s biggest refining cen-tre, selling to the domestic market, inland Europeand other regions.

That means that players, such as Statoil, whowant to supply Germany with imported petrol facestiff competition and limited market access.

The main environmental benefit of Statoil’s sul-phur-free petrol must accordingly be sought in itsdomestic Scandinavian markets, once these beginto demand this product.

In the meantime, the group can exploit salesopportunities in Germany and probably Switzerlandfrom 2004. And it can hope that demand for“sweet” petrol will increase in the UK, theNetherlands and other markets during the year.


TONNES CONSUMED PER YEAR, MILLIONS

Norway 1.6Sweden 4.0Denmark 1.9Finland 1.8Ireland 1.4Germany 30.0UK 20.0Netherlands 4.2Switzerland 3.8

Western Europe 120.0USA 380.0World total 865.0

Size of some important petrol markets

www.statoil.com/statoils_world

E

Return address:StatoilN-4035 Stavanger, Norway

PORTO BETALTVED

INNLEVERINGAP. P.

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