Statoil’s Development The NOC...
Transcript of Statoil’s Development The NOC...
Statoil’s DevelopmentThe NOC perspective
Berlin, 2 February, 2006
Njål GjedremSpecial AdvisorStatoil
2
This is Statoil
• A major oil and gas producer:1.1 million boe per day
• World’s third largest net seller of crude oil
• Markets two-thirds of all Norwegian gas to European customers
• Largest retailer of oil products in Scandinavia
• A group with clear growth targets
3
This is Statoil
In Salah gas treatment plant in Algeria
• A highly competent technology company
• Operations in 30 countries
• Annual turnover of NOK 306 billion (2004)
• About 24,000 employees
• Established in 1972 Partially privatised in 2001
4
Operations in 30 countries
Saudi Arabia
Turkey
Kazakhstan
United ArabEmirates
Algeria
Denmark
Nigeria
Norway
Brazil
IrelandBelgium
France
Sweden
UK
PolandGermany
Russia
Azerbaijan
Angola
Mexico
USA
Singapore
Iran
Lithuania
LatviaEstonia
Venezuela
Libya ChinaQatar
5
Estimated market position in 2007 based on current
contracts*
*Statoil incl. SDFI
Natural gas:Solid market position• Rising exports and
big reserves close to the main market
• Covers 10 per cent of European consumption
• Delivers to the USA and 13 countries in Europe
• Gas deliveries from Algeria and Azerbaijan
Statoil of total (%)
Country
GermanyFranceBelgium
Czech Rep
Italy<5%Turkey
IrelandAustria
10-15%NetherlandsSpain5-10%UK
~20%
6
Harstad
Stjørdal
Bergen
StavangerCore areas
OfficesFields operatedby Statoil
Largest operator on the NCS
• 48% of Norway’soil production
• 82% of Norway’sgas production
• 22 oil and gas fields
Halten/NordlandGrowth area
TampenMatured area
Troll/SleipnerGas machine
A world-class oil and gas province Statoil operates:
7
Gas transport and terminals
• Export pipelines to Germany, Belgium, France and the UK
• High regularity and great flexibility
• Statoil is technical operator for 6,000kmof pipeline
Nyhamna
Europipe II
Europipe I
Norpipe
Emden
Teesside
ÅTS
Norne
Åsgard
Haltenpipe
Heidrun
Franpipe
Zeebrugge
Zeepipe I
St Fergus
Vesterled
Frigg
Statfjord
Kårstø
Kollsnes
Melkøya
Snøhvit
Ormen Lange
Easington
Langeled
Ekofisk
Sleipner
Troll
Dunkerque
Kristin
8
The Norwegian objective in 1972
• Petroleum resources belong to the nation
• Development of the resources must benefit the society as a whole
• National involvement, but strong international participation
• Resource management
• Technology and competence
• Three national oil companies
9
The 10 petroleum ”commandments”
Principles laid down by Parliament in 1971:• Secure national control
• National independence in supply of oil
• Develop a petroleum-based onshore industry
• Secure the environment and existing industries
• Burning of gas on the NCS not acceptable
• Petroleum to be transported ashore to Norway from the offshore fields
• The state an active player promoting national interestsin resource management
• A state oil company to take care of the state’s businessinterests and to cooperate with Norwegian and foreign companies
• Special requirements for petroleum activies in Northern Norway
• Major petroleum dicoveries will introduce new challenges for Norwegian foreign policy
10
Arm’s length to the Minister of Petroleum and Energy
The national oil company goalsStatoil was established as an instrument in 1972
• To secure national control of the energy resources
• To become a fully integrated, commercial and operating oil company
• To develop a strong national support industry
• Board of non-executive directors
11
Statoil through changing environments
Yearly production 2004: 1005 mboepd
Target 2007: 1400 mboepd
Statoil establisheda national project
Domestic focus
Commercialisation
Designing a new industry
Gradually increasingCompetitive exposure
A competencecompany
1972 1985
Focus on Scandinavia
Organizational and competence development
Delivery
Profitability and shareholder return
Focus onperformance
2001
Strategic alliance
with BP
Internationalisation
1990
12
Striking the right balanceNational versus international involvement
• Encourage partnerships between foreign and domestic companies
– Diversity in participation
– Long term perspectives
• Active Norwegian involvement after the first discoveries
– Statoil 100% state-owned
– Hydro 51% state-owned
– Saga 100% private
• Transfer of technology requires involvement
13
• Statoil was organised as a 100% shareholding company – where the government owned the shares, but the company was independent of the annual state budgets
The initial “Norwegian Model”A structure for clear responsibilities
Statoil
NPDNorwegian Petroleum
Directorate
MPEMinistry of Petroleum and
Energy
14
Evolution of the ownership modelFrom policy instrument to listed industry engine
Government Government
The original Norwegian model
Changes in 2001
SDFI*)
100 per cent
82 per cent
100 per cent
*) State’s Direct Financial Interest.
100 per cent
• Separation of assets between Statoil and SDFI
• 2001: Listed in Oslo and New York
• 2005: Government stake down to 70 per cent
MPEMinistry
NPDDirectorate
Policydesign
Monitoringand regulation
Commercialoperation
Changes in 1985
Rationale:
Statoil’s dominating role in the Norwegian economy
Rationale:
Access to capital markets and new roads to growth
More loosely linked to Norwegian politics
15
Stronger portfolio, better performancePreparations started internally
Portfoliorestructuring
Market valueBook value
Bokført verdi
Focused growth
Costreduction
Management and control
• High-grading the portfolio
– 1999-2001: 21 per cent ofcapital employed divested
– 2003: Navion divested
– 2005: Borealis divested
– Strategic acquisitions
• Improvement efforts
– 1999-2001: NOK 4.4 bn
– Another 3.1 bn by 2004
– Performance managementsystems implemented
16
Privatisation process and new industrial landscape
1 Equity story
2 Marketing
3 Performance
Valuation/share price
2000 2001 2002 2003
Preparations Marketing IPO Investor relations
• Integrated oil and gas company
• Large operator on the NCS
• Private owners
• International activities
• Full exposure to competition
• Manager of the State’s Direct Financial Interests (SDFI)
• No operatorships
• 100 per cent state-owned
• Operator for the gas grid on the NCS
• Capacity administrator
• Balance the interests of all shippers
• 100 per cent state-owned
17
The way forward:A globally competitive company
Strictly managed, prudently controlled:
Board of directors
General meeting
President and CEO Corporateaudit
Externalauditor
Corporate assembly
Robust industrial platform:
Success factors:
•Sound policies, regulations and governance
•A large resource and value potential
•Flexible and reliable gas supply
•Courageous technology attitude
•Competent and motivated people
•High HSE standards and performance
Shareholdervalue
Shareholdervalue
Creditors
Partners
Suppliers
The public
Customers
NGOsEmployees
Performance contracts
• Strategic direction• Balanced
scorecard• Key results• Incentive-based
remuneration
Performance contracts
• Strategic direction• Balanced
scorecard• Key results• Incentive-based
remuneration
Corporate governance:
18
Building future growthInternational E&P
0
50
100
150
200
250
300
2001 2004 2007 mål
Azerbaijan
•In Salah regularity 99%
•Hassi Mouinacommenced seismic, first expl well planned for 4Q 05
Algeria
•Kizomba B on stream
•Juno I discovery (block 31)
Angola
Gulf of Mexico
•BTC linefill started
•ACG West Azeri platform jacket installed
China
•Ballena 1 well on Plataforma Deltana suspended
•Sincor royalty issue
Venezuela •Lufeng production resumed
•USD 2 bnacquisition of GoM deepwater portfolio completed
•3 wells being drilled in 2005
Barents Sea•Shtokman development proposal submitted to Gazprom
•Collaboration agreement with Gazprom and Hydro Kazakhstan
•MoU with KazMunayGaz on joint exploration of Abay in Caspian
19
18
New leadership and operating model
People &Leadership
”Licenceto operate”
Results
• New operating model to balanceperformance and health
• Corporate initiatives to drive step-change in performance
• New managementteams
• Clear corporatevalues
• Sound operating principles
• Strengthen relationsbetween companyand society