N O 1

Promising
prospects

2 0 0 3

page 4

Doing their level best

page 22

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.
Natural resources have not only given our country large revenues, but also laid the basis for a great
fund 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 currently being exerted on incomes, exchange rates and economic policy.
Norway has become significantly less competitive than its most important trading partners. Since the
mid-1990s, incomes have grown about 13 per cent faster than in these other nations and the NOK has
strengthened by almost 15 per cent.
We at Statoil share the same challenges as the rest of Norwegian industry. High wage inflation and a
strong 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 competitiveness has been heavily undermined in jobs which involve a big input of working hours. This has meant
the award of several major assignments to other countries.
It is easy to understand the disappointment in companies which fail to win such contracts. That makes
such awards particularly challenging for us, and we accordingly carry out a thorough assessment before
taking a decision. However, we have no choice but to accept the best bids in terms of quality, price, ability 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 technology, so that our nation can meet the future challenges on the NCS and protect the international competitiveness of its industry.

Olav Fjell
President and CEO

STATOIL

MAGAZINE

Contents

Since offshore operations began on the Norwegian continental shelf almost 40 years ago, one of the basic
principles of national policy has been to create a strong domestic oil industry. The aim is to exploit natural resources to build a firm industrial base.
The country has succeeded better than anyone could have imagined at the start. Through investment
and 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 largely accumulated in government hands through its petroleum fund.
Many oil-producing countries now want to emulate Norways success. Securing economic and social
spin-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 high
priority in all these places. That would strengthen the contribution petroleum can make to their long-term
sustainable development.
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.
After more than three decades of extensive development and a sharp growth in production, the
Norwegian oil and gas province is moving into a more mature phase. Output from the major fields discovered in the 1970s and 1980s has been gradually declining.
Key challenges today involve extending the lifetime of these developments, which have formed the
backbone of Norways oil and gas business for many years. At the same time, the country must develop
and 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 innovative
technological 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 over
the past 20 years. That has allowed us to place contracts worth more than NOK 500 billion in current
money.
The bulk of this work has been won by Norwegian companies against stiff competition. Over the past
decade, domestic suppliers have accounted for well over 60 per cent of our orders. The share in 2002 was
67 per cent. That has laid the basis for jobs and the development of considerable expertise.

36
Trading for
the future

Promising prospects for

Angolas oil blocks

22

Clearing the ground on Melkya

28

Scoring a success

4
10
12
13
16
18
19

Flowering field
Norwegian in depth
Making good music
Breaking camp
Reclaiming the land
Committed to creating value
Thinking the world

28 An eye on the ball

35 Onside with sport
36 The interview:
Playing the trading game
40 Technology:
Shooting for zero
44 Status

22 Challenging constuction
27 Gas by remote control

48 Market focus:
Getting sweeter

STATOIL

MAGAZINE

EL

No 1, volume 25, March 2003

Editor:
Benedicte Pentz, benpen@statoil.com, +47 51 99 83 37
English editors:
Rolf E Gooderham, rolf@regnorth.com
Eileen M J Doig, emjd@statoil.com
Circulation:
Liv Randi Paulsen, lrp@statoil.com, +47 51 99 66 74
Published by:
Statoil ASA
N-4035 Stavanger
Tel: +47 51 99 00 00
Fax: +47 51 99 46 04
IC ECOLAB
RD
Design: Apropos Reklamebyr
Typesetting: Graphic department, Statoil
Printer: Bryne Offset. Circulation: 18 000
Reproduction only by permission from the publisher
Internet: http://www.statoil.com
NO

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
Statoils non-Norwegian production. (Photo: yvind Hagen)

Flowering
field
The 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 worlds largest production ship on Girassol off Angola.

Operative David Finda takes a dawn

tour of the Girassol ship.

floating tangle of yellow piping is

the sight which greets the visitor
arriving at the Girassol production
ship after a one-hour helicopter
flight.
The massive vessel lies motionless in the tropical sea, while various other ships cut through the
slightly choppy water on either side.
Girassol means sunflower, but that can hardly
be the reason why the complex web of piping on
deck has been painted its cheerful colour.
And Angolas recent past is no sunshine story.
Slums along the road to the heliport outside the capital, Luanda, show what 40 years of almost continuous war can do to a country and a people.
But peace was restored in April 2002, and the
nation is trying to get back on its feet. Extensive
natural resources provide a rich endowment.
This country ranks, for instance, as the second
largest oil producer in sub-Saharan Africa after
Nigeria where Statoil also has operations.
Conditions on Girassol include a temperature of
33C and high humidity. Hardly strange, then, that
most of the 160 crew wear their boiler suits open to
the waist.
Two-thirds of these personnel are Angolans who
spend two weeks offshore and have two weeks free.
Foreign employees work a four week on-four week
off rotation.

CABINDA

Block 15

Block 31

DEMOCRATIC
REPUBLIC
OF CONGO

ANGOLA

T E X T

inger.ueland@statoil.com

P H O T O S

oyvind.hagen@statoil.com

Block 17
ANGOLA

AFRICA
Luanda

LINKS

100km

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 represents one of its international core assets.

Our aim on Girassol, as in all our Angolan

operations, is to replace foreigners with local
employees, explains operations manager Roger
Poirier from operator TotalFinaElf.
He notes that one of the challenges facing the
industry in Angola is the countrys shortage of technical personnel.
Employees must be sent to school before they
can start their training. Producing a qualified engineer can take five-six years. We have a continuous
flow of students for our Angolan operation.
The vessel is categorisied as a floating production, storage and offloading (FPSO) unit, and its
output ultimately passes to a loading buoy located
1.5 kilometres away.
Oil tankers take on about 900 000 barrels at a
time from the field every four-five days, and ship
these cargoes to Asia, America or Europe.
TotalFinaElf has 40 per cent of Girassol, while
Statoil holds 13.33 per cent. The other partners are
ExxonMobil with 20 per cent, BP with 16.67 per
cent and Norways Norsk Hydro with 10 per cent.
Statoil receives a consignment at roughly 25-day
intervals, and trades this and Hydros share from
London. With a low sulphur content, the crude is
similar to North Sea oils.
The field represents one of Statoils biggest
sources of crude outside Norway, and Angola is
very important in the internationalisation process
currently under way at the group.
Were partners in Angolas golden blocks
15 and 17, explains John Knight, senior vice president for international oil in the International
Exploration & Production business area.
These licences have yielded a string of discoveries. Were also partners in block 31, where the
first find in ultra-deep Angolan waters was made
last year.
Girassol is the countrys first field to come on
stream with Statoil as a participant. Production

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MAGAZINE

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

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

began in December 2001. And a number of other

finds are queuing to be approved for development.
We think theres still great potential for new
finds off Angola, and were interested in expanding
our activities there, says Mr Knight.
French and Portuguese are the working languages on Girassol, while all the technical manuals
are written in English. Signs on the FPSO are trilingual.
And Norwegian can occasionally be heard.
Norways supplies industry is represented not only
on the seabed (see separate article on page 10) but
also topside.
Hallgeir Jenssen is a senior service engineer from
CorrOcean, for instance, who has been sent to train
personnel in a computer programme which measures the wall thickness of steel pipe.
A niche product and unique in the world, this

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

STATOIL

MAGAZINE

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

STATOIL

MAGAZINE

Inacio Pucuta monitors production from the control room.

software can identify changes as small as 0.5 per

cent and has been developed with support from
operators off Norway.
My impression is that Norwegian expertise is
very strongly placed, not only with FPSOs and subsea installations but also in many other disciplines,
Mr Jenssen observes.
Norway has a reputation as a high-tech supplier and, while its industry might be regarded as a little expensive, the price is seen as worthwhile
because of the quality involved.
He has been on Girassol four times before, to
install and commission the system as well as to provide training in its use.
The field has a long producing life, and its
pipelines need to be monitored continuously, he
notes.
Mr Poirier says that many of the crew have experience from the Norwegian continental shelf.
People expect to find lower safety standards off

Angola, and are taken aback when they discover

that the rules are just as stringent as theyre used
to.
He is well satisfied with the health, safety and
environmental results achieved on the field.
TotalFinaElfs regulations are as rigorously
enforced here as anywhere else. We naturally have
our own safety supervisor on board, and hold regular safety meetings.
On the environmental side, he says the gas compressor on the vessel is expensive but environment-friendly. It injects gas back below ground as
an alternative to flaring.
Girassol lies in 1 400 metres of water and has 11
subsea production wells on stream. Another four
producers are due to be drilled later this year.
In addition come seven wells for water injection
to help maintain reservoir pressure, with the
Girassol floater able to pump down 390 000 daily
barrels of water.
Wellstreams flow from the seabed through three
thermally-insulated tensioned riser towers, each
1 300 metres high, linked by flexible risers to the
FPSO about 200 metres away.
Output reached the current plateau level in less
than four months, Mr Poirier reports.
Start-up went reasonably well, and production
rose quickly to the average level of 200 000 barrels
per day. Were very satisfied with this performance,
and so are our partners.
He also describes the resources in block 17 as
very good. Thirteen promising discoveries have
been made there, and reserves are estimated to total
about three billion barrels.
If national oil company Sonangol permits, we
could boost Girassols average daily output from
200 000 to 230 000 barrels until 2006 by drilling an
extra well, says Mr Poirier.
Support ships Mrsk Attender, Seaway Legend
and Seaway Explorer have adopted a triangular for-

STATOIL

MAGAZINE

mation near the FPSO to start work on laying a new

production flowline to Jasmim.
This field is due to be tied back to Girassol in the
second half of the year, and will be followed by
Rosa and Lirio in 2006.
Accommodation ladders extend down the sides
of the FPSO to the sea, allowing crewboats to lay
alongside to put off or pick up personnel as an
alternative to helicopter flights.
That contrasts sharply with Norwegian offshore
practice, based on helicopter transport. While
waves off Angola seldom top four metres, they can
reach well above 20 metres on the NCS.
Operative Manuel da Costa is nearing the end of
his tour and is looking forward to a fortnight on
land. His wife, four children and mother live in
Luanda.
I like to spend my shore leave with the kids,
preferably on the beach or in the park, he explains.
The nationality of the ships operator is clearly
evident in the canteen, where both lunch and dinner
are followed by cheese, while an espresso machine
stands in the dayroom.

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

Norwegian in depth

Three cinemas show films in English, French

and Portuguese respectively, and the vessel has its
own gym and a combined library and music room.
This evening, Roberto Meizer from Argentina
peacefully strums the electric guitar. Roy Steemson
from Durban wants him to play Stairway to Heaven
or something by Abba.

Virtually all the subsea installations deployed on Girassol, the worlds largest
deepwater field, come from Norway.
FMC Kongsberg Subsea has its Angolan base and workshop in the port
area of Luanda. The Norwegian company set up shop there after winning a
Girassol contract in 1998.
It has delivered all the subsea equipment, with the exception of locally produced production tubing and pipeline bundles which link wells and manifolds.
The companys personnel have also installed these fully-integrated subsea
production systems and now inspect and maintain them.
Forklift truck drivers scoot to and fro with equipment in the huge Luanda
production shop. Other workers have taken apart some of the massive assemblies to inspect them.
Three closed case foundations loom over the quay as they wait to head for
their new home on the seabed off Angola.
Each of these units is 11 metres high, reports offshore intervention supervisor Tor Egil sheim, one of seven Norwegians working at the base.
Developments off Norway have provided the model for much of whats
been done in Angola, he explains. The technological skills weve developed
are in demand.
Almost 20 vessels are berthed at the quay. Generally speaking, FMC
receives shipments of large subsea components only twice a year. But supplies
are airlifted from Norway on a weekly basis.
Later this week were expecting a big consignment of wellheads and manifolds, Mr sheim reports. They will be added to 22 wellheads already supplied to Girassol.
Were due to install another 18 on that field, and then five on Jasmim,
says operations manager Neil McGregor. All the equipment from Norway
will be delivered by late next year.
Of the companys 170 employees, 44 have been recruited locally.
Angolans are being trained on a continuous basis to take jobs at the base, on
the installation rigs and on the vessels.
The training system weve set up has led with time to a very good transfer of experience and knowledge, Mr sheim reports.
Before the project started, 40 newly-recruited Angolans were sent to
Norway for training. Today, FMC provides all such education at the Angolan
base.
The companys own education, training and development coordinator
monitors each employee individually.
More than 100 subsea wells are due to be installed off Angola over the next
couple of years, and the FMC staff see a bright future in the local oil industry.
STATOIL

10

MAGAZINE

Both work for a scaffolding company and live in

South Africa. Joao Xivi, a mechanic from Luanda,
relaxes on the couch with a crime novel.
Alfredo Ferreira is a production operative during the day and volunteer librarian in the evenings.
People pop in all the time to check out books and
CDs. Angolan zuck music is particularly popular,
he reports.
In the darkness outside, the lights of the Pride
Angola and Pride Africa rigs can just be discerned.
The Norwegian-owned Leiv Eriksson rig lies to the
north.
But the Girassol FPSO will soon be getting even
more company. It is due to be joined in coming
years by new oil installations on Angolas promising continental shelf.

Guitar-playing and reading make the evening pass for Roy

Steemson (left), Joao Xivi and Roberto Meizer.

Lights twinkle on the horizon as

David Finda does his rounds on
the Girassol ship.

Making
good music
While all the discoveries in Angolas block 17 are named after
flowers, musical instruments provide the designations for those in
ExxonMobils block 15.
More than three billion barrels of recoverable oil are already
proven in this licence, where development plans for Kizomba A
and B have received official go-ahead.
This project involves a new production ship on Kizomba A with
a daily capacity of 250 000 barrels. Able to hold 2.2 million barrels, it will lie in some 1 300 metres of water.
By comparison, Statoils sgard A oil production ship in the
Norwegian Sea produces 220 000 barrels per day and can store 910
000 barrels. The water depth is roughly 300 metres.
The Kizomba A vessel emerged from the construction dock in
South Korea during the winter and is now at the outfitting quay
while equipment modules are lifted on board.
Plans call for it to start a 96-day tow to Angola in December and
to begin production in July 2004.
With 950 million barrels in recoverable reserves, Kizomba A is
due to be developed with 54 wells. Work on drilling the producers
has already begun.
The smaller Xikomba field has been given the go-ahead to come
on stream in late 2003. A tanker is being converted to produce up
to 85 000 daily barrels in just over 1 300 metres of water.
Blocks 14-29 on the Angolan continental shelf are characterised
as deepwater acreage, while those from 30-34 are ultra-deepwater
down to 2 500 metres.
Two exploration wells have been drilled on BPs block 31.
These are named after heavenly bodies, and the Plutao 1 wildcat
has 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 and
Xikomba will boost Statoils total Angolan output to about 80 000
barrels per day from 2006.
Adding Dalia, which is expected to receive development sanction in 2003, will push its share of production from this country
above 100 000 daily barrels.
Since Statoils goal is to produce 260 000 barrels per day outside the NCS, Angolan blocks 15 and 17 are set to account for a
substantial part of that figure.
Angolas next bidding round for offshore licences depends on
the results from exploration drilling in blocks 31 to 34. Statoil is
considering opportunities to become an operator.
Oil was found on land in Angola in the early 20th century, but
the discovery remained unexploited for 50 years. Seismic surveying on the Angolan continental shelf began in the 1970s.
Today, oil accounts for more than 60 per cent of the countrys
gross domestic product. Production has never been affected by the
fighting.
Discoveries are made in two out of three exploration wells
drilled off Angola, which compares very favourably with a global
rate of 15 per cent.

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MAGAZINE

Breaking
camp
Every third Angolan has fled their home. After
less than a year of peace, however, a growing
number of these displaced people are returning.

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

he white bags of maize slide off the

lorry with a dusty thump. Before passenger flights have begun, the cargo
planes at Luanda airport are preparing to
freight food and equipment to countrys
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 the
Norwegian Refugee Council, is taking me on a visit
to the camps in the south-eastern region which the
UN has asked her organisation to run.
The council provides humanitarian assistance to
refugees and displaced people in 14 countries, and
has been present in Angola since 1995.
It organises temporary distribution of food and
necessities, legal help, information and advice, education and accommodation.

Under an agreement with the council, Statoil has

contributed funds to humanitarian projects over the
past three years in countries where the group has a
presence.
Part of these funds were spent last year on training teachers to work in the Angolan refugee camps,
which help to accommodate some four million displaced people.
Because they have not crossed internationally-

LINKS

ANGOLA

T E X T

inger.ueland@statoil.com

P H O T O S

oyvind.hagen@statoil.com

Statoil is supporting humanitarian projects being pursued in Angola by

the Norwegian Refugee Council and the Norwegian Peoples Relief
Association.

The refugees get help in the camp to farm the land and keep livestock so that they
can be as self-sufficient as possible.

recognised borders, these victims of war are not

defined as refugees and are not protected by the relevant UN convention.
A further 450 000 Angolans have fled to neighbouring countries such as Namibia, Zambia, the
Democratic Republic of Congo and Zimbabwe.
The aircraft flies over Luanda in the slanting
morning sunshine, which glitters on the corrugated
iron roofs of the capitals slums.
Angola is rich in resources such as petroleum and
diamonds, but its 13 million inhabitants are among
the worlds poorest. Every third child fails to reach
its fifth birthday.
A lacy fringe of white beaches runs along the
countrys coast to the west, with the palms standing
like exclamation marks against the horizon.
But the cargo plane is heading inland, to the
Huila province. Within a couple of hours, it passes
over rain forest cloaking the slopes which rise to a
plateau 1 800 metres above sea level.
Jon Tellum, head of the first camp we are visiting, meets us at the airfield in Lubango. Less than
an hours journey brings us to the town of Matala.
A local dam and power station made this an important defensive position for government forces during
the civil war. The front line was only 10 kilometres
away, and landmines are still scattered thickly around.
But the town and the surrounding reddish-brown
countryside were secure, so people from nearby
communities sought shelter there.
An all-terrain vehicle conveys us to the
Candjanguite refugee camp, where the dry fields
are filled with round mud huts.
At peak, the local authority has hosted 80 000
displaced people in 20 different locations. Driven
by hunger, the flow of new arrivals did not cease
until last November.
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MAGAZINE

Now 30 000 people occupy six-seven camps in

the area, living in traditional huts they build themselves from mud bricks reinforced with sticks. The
roofs are thatched.
Most of the Candjanguite inhabitants have a
patch of ground they can cultivate, about eight kilometres away, with help from the refugee council.
The aim is to make them as self-sufficient as
possible, and their other needs are met from supplies flown in once a month by the World Food
Programme.
Mr Tellum helps the refugees on the agricultural
front. He is a forestry graduate and has conducted a
reforestation school in the camps.
You need to replant when so many people have
lived 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 camp
area, he has concentrated largely on planting eucalyptus, jacaranda, papaya and mango.
Mr Tellum has been involved in development
assistance and emergency aid work for more than
20 years. A quiet man, he has often been the first to
enter new areas to establish camps.
Helena Henda is one of the refugee councils 14
Angolans who provide schoolteachers from other
parts of the country with intensive courses in the
Teachers Emergency Package (TEP).
She has accompanied us on the flight from
Luanda to provide follow-up for teachers in the
camp who use this special methodology.
Many children in the 12-17 age range have
missed out on school because of the war. They are
now too old to be given priority in the regular
schools.
Roughly 60 per cent of Angolan children have
no access to education. The refugee council has

Teacher Jos Gala holds a class in the shade of a tree.

agreed with the government that youngsters can be

integrated into ordinary schools once they have
been though the TEP programme.
Statoil has financed the training of 50 teachers
from Matala and provided the materials which
allow them to teach in the open air without the need
for paper.
The TEP model was originally developed by
Unicef, and has been further refined and adapted for
Angolan needs by the refugee council.
A large acacia tree serves as a classroom, and
happy children sit on stones and logs under the
leafy canopy which provides perches for the twittering birds.
From the blue box which contains all the aids he
needs, teacher Jos Gala has handed out slates,
chalk, pencils and rubbers.
The contents of one TEP box makes it possible
to teach two classes, each with a maximum of 25
pupils, in any available location.
Up to 70 per cent of a class may be traumatised
by war, having seen adults shot, their mothers,
fathers and siblings killed or abused by soldiers, or
people injured by landmines.
Both sides in the conflict captured children and
used them as labour. Now the refugee council must
train teachers in how to deal with traumatised
pupils.
Going to school increases their sense of security, says Ms Svendsen. Theyre keen to learn and
are glad to have somewhere to go every day.
Making school pleasurable is incredibly important
for them.
But children with traumas have a tendency to be
inattentive in class.
We must show them we care, but it takes time,
says Alexandre Moises, head of TEP education in

Gracianna Sekula and her friends are learning to read and write. The children also get help at school to overcome their
traumatic wartime experiences.

Matala. Lessons must include a lot of play. That

helps the children to forget their experiences.
A class is often split into smaller groups or pairs
because that helps to make the youngsters feel more
secure. Much use is made of singing and drama as
well as games.
This approach makes heavy demands on the
teachers. But learning through play means that the
pupils do not find education exceptionally demanding.
The Tomba camp is about 20 kilometres from
Candjanguite, along a road which runs like an
orange slash across the flat, dry landscape.
Team sports are being played there handball
for the girls, soccer for the boys. The refugee council has given them balls and shoes, while their shirts
and football boots come from Statoil.
Sport plays a very positive role in efforts to
encourage peace and reconciliation, Ms Svendsen
observes from the touchline.
Young people from Lubango help the refugees to
organise sports clubs, and also use drama to explain
human rights, farming, health, preparations for the
return home and the landmine danger.
Although people in Tomba have been displaced
from areas controlled by both sides in the civil war,
they have little sympathy for either Unita rebels or
the governments MPLA army.
As they cautiously return home on foot or by
lorry, the refugee council welcomes them by distributing rations for a month at a time.
Each person gets 12 kilograms of maize, 1.8
kilograms of beans, 75 centilitres of oil and 150
grams of salt adding up to a daily ration of 2 000
calories.
In addition, they receive clothes, blankets, kitchenware and farming implements as well as seedcorn.
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MAGAZINE

Reclaiming land is simple in areas which have

been completely abandoned. But many refugees
have been away for more than three decades, and
others may be occupying their former property.
So some of the displaced people want to stay in
the camps because of problems in asserting their
claims to land ownership in such circumstances.
Marjana Teresa sits on a low bench outside her
hut, with three-year-old daughter Georgina Marizia
asleep on her lap in the midday heat.
She lived in a neighbouring district before she
and her family had to flee a couple of years ago.
They walked for five days, with some members of
the party killed by mines and others shot.
The children suffered, she recalls in a sad
voice, with an almost expressionless face. They
were hungry.
Now her family is preparing to leave. Her husband has already returned home, and she is preparing to follow with their three young children.
But she will not be going until the vegetables on
her camp plot have been harvested. Her other possessions include a few cows, kitchen implements,
blankets and clothes.
Im hoping for a future at home, but darent
believe completely that the peace will last, she
says.
The refugee council is making sure that her family and others returning home have access to clean
water, schooling and healthcare.
While 300 people per month were going back
where they came from between May and October
last year, that figure had risen to 1 500 by January.
If peace persists and the camps continue to
empty, the refugee council will also be able to
depart from Angola in one-two years time - its job
done.

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

water, the soil yields two harvests a year.

Reclaiming
the land
Boa Esperanza means good hope. And that is just
what the residents of this Angolan village now possess. Within a couple of years, they should no
longer need outside assistance.
Fertile fields of maize, beans, tomatoes and
bananas have been created by refugees after
clearing the thorny scrub which used to cover the
area.
About 300 huts are surrounded by arable land
irrigated from a dam lower down the slope.
Provided it gets water, the soil is very productive
and yields two harvests a year.
The new settlement stands in the Kwanza Sul
province, about 300 kilometres from Luanda.
Twenty per cent of its 400 000 residents are displaced persons.
Although the refugees have cleared the land by
hand in understanding with the authorities, they
have no written deeds to show that the property is
theirs.
The Norwegian Peoples Relief Association is
helping four villages in this province, which
accommodate about 2 000 displaced people.
Together with local partners, the association is
running a rural development project which has been
getting support from Statoil since 1998.
Boa Esperanza resident Cristovav Domingos
Molinho recalls the time in 1985 when he first had
to flee from his farm.
We ran and ran that night. We hid in the bushes. After four days, we reached this area completely empty-handed.
Six years later, Mr Molinho returned to his farm.
But Unita rebels burnt the houses and destroyed
everything in the village during the mid-1990s.

The Molinhos farm, which raised cattle and cultivated bananas and oil palms, was also razed.
Those who fled were the only survivors.
His wife, Maria Guisado, sits silently beside him
with their daughter Gunda. None of them speak
Portuguese, only the local language.
The family arrived in Boa Esperanza for the second
time in 1999, and have now decided to remain. This
village, 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 receive
an education. Her parents, like most of the other villagers, are illiterate.
Mr Molinho says that he feels sure things will
get better now that peace has returned, and sees
signs which encourage his optimism.
The villagers think their lives are good now,
after getting help to build the dam, the irrigation
system and a silo. They have also learnt new farming and fishing techniques.
A seed bank has been established, and improved
methods of stockbreeding, composting, ecological
agriculture and combating soil erosion introduced.
International aid bodies arent supposed to do
the job for Angolans, says Arne ygard, the local
representative for the relief association.
But we assist national organisations in rural
areas, so that Angolans can help each other. That
allows us to get more out of our resources. For each
foreign expert, there are 100 locals.
The refugee villages are due to be self-sustaining
within a couple of years. Income from fruit and
vegetable sales can be invested in simple equipment
such as pumps and hoses.
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At Maria Julia, another of these settlements, 20

or so mud huts with thatched roofs cluster around
an acacia tree covered with orange blossom.
The relief association launched its project in this
village in 2000, and fertile fields now lie all around.
The River Cubal runs quietly below them, its
banks green with dense vegetation. A black plastic
pipeline 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.

Women outnumber men in Angola, but the patriarchal family system persists. Special projects are run
by the relief association to promote female rights.
Its Women Can Do It programme motivates
them to play an active role in public life, for
instance.
Although both genders are equally entitled to
farm, women find in practice that their access to
land and irrigation opportunities is more restricted
than for males.
To ease the heavy workloads borne by Angolan
women, the relief association has established a
micro credit scheme which provides training in
selling products such as fish and farm produce.
Now 38, Laurinda Ananjo fled from a Unita
attack to Maria Julia when she was 20 years old.
Both her parents were killed. She is raising six children today.
Things are getting better all the time, she says.
Since the relief association launched its projects,
weve expanded our range of products and
obtained better harvests.
Were also cultivating land which lies closer to
the village, so that we dont have to walk so far to
reach our fields.
As a participant in the associations project for
women, she receives a batch of dried fish to sell on
credit.
Asked what her hopes are for the future, Ms
Ananjo says she wants to see a better life for her
children and some health care provision.
Only 24 per cent of Angolans have access to
health services, which has helped to reduce life
expectancy to 45 years. Roughly 50 per cent of the
population is less than 18 years old.
Many people in this war-ravaged country have
little knowledge of their rights. The rescue association and its partners are working to spread information on democratic rules and principles.
To help in this work, they have recruited a youth
group from the nearest town to pass on these messages by acting them out on stage.
This team attracts the villagers of Maria Julia
with drums, song and dance, and the audience of
about 60 stands and sits on logs under the acacia.
Three young boys perform a sketch about meetings. Suddenly, one of them apparently remembers
something and cries out: But weve forgotten to
bring our wives!
Aaah, the audience murmurs. That is true.
Village women also have rights, but these are easily forgotten.
Everyone laughs heartily when four young girls
appear, very indignant about being forgotten. They
attract big applause as they scold the boys.
The performance also covers such topics as
health and education before the youngsters start
discussing how they should spend the money they
earn from their produce. The audience laughs and
enjoys itself.
Ana Paula de Jesus Antonio, deputy head of the
development programme in Angola, sums up: To
achieve democracy, peace must be maintained. To
achieve that, people must be reconciled. Popular
education like this contributes to both goals.

A street market in Luanda, which used to be acclaimed as one of Africas most beautiful cities. Seafarers from Portugal
arrived in the late 15th century and, although the country gained independence in 1975, Portuguese remains the official language. 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.

Committed to creating value

Through its presence in Angola, Statoil wants to
help ensure that the countrys huge resources are
exploited in a way which benefits the whole population, affirms Geir Westgaard.
After decades of war, the restoration of peace
in Angola raises hopes that development will take
that direction, says the groups vice president for
country analysis and social responsibility.
But operating in a way which strengthens the
community is often easier said than done, as chief
executive Olav Fjell noted in the first Statoil sustainability report last year.
That challenge is one which the group has certainly faced in Angola, Mr Westgaard admits.
He believes that Statoil, through its commitment to ethically acceptable, environment-friendly and socially responsible conduct, can help to
give Angolans better lives.
The positive impact of its investment relates to
employment, local procurement of goods and
services, and the transfer of technology and
expertise.
In addition come the benefits of building infrastructure and supporting the development efforts
pursued by various aid organisations.
So far, its been more difficult to identify cor-

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responding positive effects at the national level,

Mr Westgaard notes.
Thats partly a result of the civil war, but also
reflects weaknesses relating to transparency,
responsibility and mode of government.
International oil companies operating in
Angola face growing calls to be more open about
their financial transactions, and to publish
accounts of what they pay the government in taxes
and bonuses.
In that context, Statoil has asserted that it
applies the same standard of transparency in
Angola as elsewhere. Accounts for its operations
in the country are openly available from the
Norwegian Registry of Companies.
But we also recognise that corruption is a
social evil which must be fought with openness,
Mr Westgaard emphasises.
So were actively involved in the current dialogue between companies, government and voluntary organisations over ways in which greater
financial transparency can and should be
achieved.
We dont feel weve anything to hide, and are
accordingly concerned to avoid suspicions or
accusations that were concealing information.

THINKING
THE WORLD

A new course is being set by Statoil with the aim of building international
success on the basis of its experience from 30 years on the Norwegian
continental shelf. Briton Richard J Hubbard has the job of drawing the map.
A key role has been assigned to Mr Hubbard, as
executive vice president for International
Exploration & Production (INT), in meeting the
overall goals communicated by Statoil to the capital market.
These objectives are ambitious enough, with
non-Norwegian output intended to help Statoil
achieve an annual production growth of four per
cent up to 2007.
And the group aims to secure six new international operatorships by the end of 2004. Three of
these have already been acquired.
Another important target is an annual net
increase in reserves which will build up within a
few years to 400 million barrels of oil equivalent at
a finding cost of USD 1 per barrel.
Taken together, these ambitions are intended to
ensure that 40 per cent of the groups production
comes from operations outside Norway by 2012.
The NCS remains the cornerstone of Statoils overall oil and gas production, and it will be important
for the Exploration & Production Norway business
area to sustain its daily output of roughly one million barrels for as long as possible.
But Mr Hubbard is in full swing with the job
of extending international operations on the
basis of expertise, technology and business principles developed over many years as an NCS
operator.

Daily production by the group from licences outside Norway currently totals about 85 000 barrels.
The bulk of this comes from the Girassol field off
Angola and Venezuelas Sincor project.
Mr Hubbard notes that INT achieved its production target for 2002, and says that the immediate
goal is an international output of 260 000 barrels
per day by the end of 2007.
In addition to our projects in Angola and
Venezuela, we envisage an expansion in production
from fields west of Ireland and in Azerbaijans sector of the Caspian.
He believes that a good basis for INTs future
growth was laid during 2002, which he describes as
an excellent year.
Operatorships were secured in both Iran and
Venezuela, with the Iranian assignment formally
awarded in late October.
This makes Statoil responsible for the offshore
part of development phases six-eight on the worlds
largest gas field, South Pars in the Persian Gulf.
According to Mr Hubbard, this first operatorship
won under his leadership represents an important
initial step in the internationalisation process.
At the same time, it means that Statoil has
gained a good foothold for further commercial
development in Iran.
The operatorship for block four in the
Plataforma Deltana region off eastern Venezuela
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was awarded to Statoil towards the end of the year.

This acreage covers about 1 435 square kilometres
and lies in 200-800 metres of water.
Soon after the New Year, it became clear that
Statoil had gained a third international operatorship
covering the Shah Deniz midstream (transport)
gas development off Azerbaijan.
The group will be operator for the Azerbaijan Gas
Supply Company, which will execute and administer the sales contracts, and commercial operator of
the South Caucasus Pipeline Company.
We hope to add at least two more substantial
operatorships during 2003, observes Mr
Hubbard.
Asked to explain INTs role and vision, he says
that the experience and expertise gained on the
NCS will help to convert a national oil company
into an international player.
This involves continuing value creation in

LINKS

INTERNATIONAL GROUP

T E X T

ragnar.asland@statoil.com

P H O T O

Kjetil Alsvik

Six operatorships outside Norway by the end of 2004 are the immediate
target for Statoils internationalisation drive. And by 2012, the group
wants 40 per cent of its total production to come from non-Norwegian
sources.

Norways offshore sector while strengthening

Statoils position in the European gas market, making a commitment to new exploration provinces and
gaining operatorships abroad.
With the new operatorships, were creating
additional career opportunities in the international
arena, says Mr Hubbard.
Our success is dependent on having the right
people in the right place at the right time. Investing
in people processes is the key to achieving our
goals.
International success will also require the group
to pay more attention to downstream operations,
performance-based management and strict capital
discipline.
As a former BP executive, Mr Hubbard says that
he was impressed by the groups expertise when he
joined Statoil to head INT in November 2000.
The impression I had was of a very high level
of competence. So I was a bit surprised at how little confidence people here had that we could succeed as an international operator.
He notes that major developments pursued by
Statoil on the NCS, such as Gullfaks and sgard,
have been some of the most difficult undertakings
anyone could tackle.
With his international experience, he recognised
them as large and complex projects. Statoils ability to execute them showed that it is also qualified to
handle similar assignments abroad.
He believes the lack of self-confidence could
have something to do with a general Norwegian
sense of modesty.
When he joined the group, Statoils foreign
operatorships were limited to the small Siri and
Lufeng fields off Denmark and China respectively
and some British, Irish and Nigerian exploration
acreage.
I defined my role as building up self-confidence
rather than an expertise which was already present
after some three decades of activity on the NCS.
Mr Hubbard is accordingly very glad that international operatorships have now been secured, not
least because this demonstrates to the whole workforce what the group can achieve.
The goal in coming years is to be able to select
the best projects around the world and make a commitment to major high-quality operatorships, he
explains.
The next two-three years will therefore be very
important for the present restructuring process in
Statoil, when we identify where in the world our
expertise can best be applied.
INT also plays an important role in relation to
the groups other business areas, which includes
helping to find new sources of supply for a stronger
focus on the European gas market.
Downstream, the Manufacturing & Marketing
business area has focused by and large on
Scandinavia. But Mr Hubbard says it will also be
affected by the long-term internationalisation strategy.
Pursuing its activities in an acceptable way occupies an important place in the groups plans to
become a leading international player.
Published last year as The future is now,

Bill Maloney (left) and Richard Hubbard

have laid their plans for making Statoil an
international group.

Statoils first sustainability report looked at the

impact of its operations on people, the environment
and society.
Chief executive Olav Fjell has previously
observed that the group seeks to achieve results on
a triple bottom line financial, environmental and
social.
Statoil gained a place last year in the Dow Jones
sustainability index, and ranks among the top 10 per
cent of the worlds oil companies for this aspect of
their business.
Mr Hubbard notes that Statoil works closely with
national oil companies where it operates, and that
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these expect it to play a leading role both technologically and for health, safety and the environment.
The HSE aspect represents a substantial challenge, because were maintaining and strengthening
efforts to implement our philosophy of zero injuries
or accidents, Mr Hubbard adds.
He also emphasises the need to advance one step
at a time on environmental issues: We cant simply enter a country and change everything, but each
stride we take must be an improvement on what
existed before.
INT established its global exploration (GEX)
business cluster early last year, with four regional

be best in class and one of the worlds exploration leaders.

But he emphasises that the real contribution his
cluster can make to Statoils growth potential is
some way off. Patience and a long-term approach
are the keys to success.
In the short term, the growth in INTs production
will have to come from oil and gas discoveries
already made outside Norway.
Mr Maloney and his team played a key role in,
and did the sub-surface evaluations for, the
Plataforma Deltana application in Venezuela which
yielded the block four operatorship.
However, the bulk of our contribution to production growth will come towards the end of this
decade, he says, pointing to the time it can take to
bring new discoveries on stream.
He sees the many finds made off Angola, which
Statoil entered in the early 1990s, as a case in point.
The group is a partner in blocks 15, 17 and 31, and
substantial resources have been discovered in all
three licences.
But its only over the past few years that weve
begun to see production as a result of successes in
the early exploration phase, Mr Maloney explains.

units the Americas, Europe, Africa, and Middle

East/former Soviet Union as well as a team for
new opportunities/global screening.
American Bill Maloney, who has more than 20
years of international exploration experience with
such companies as Shell, Texaco and Chevron,
joined Statoil in February 2002 to head GEX.
Together with a team of about 150 people, his
job is to hunt for oil and gas world-wide and lead all
Statoil exploration activity outside Norway.
Mr Maloney has ambitious goals. The resource
base must be expanded if he is to boost reserves by
a net 400 million barrels of oil equivalent annually

at a finding cost of USD 1 per barrel in a few years

time.
The target set for GEX by Mr Maloney in 2002
was achieved, he says: We delivered the equivalent of 200 million barrels of oil at a finding cost of
less than USD 1.5 per barrel.
This objective remains unchanged in 2003. In
addition, GEX wants to drill nine high-quality
exploration wells and make two new discoveries.
Mr Maloney also hopes that GEX will be
drilling 10-15 high-impact wells a year for the
group from 2005: If we can achieve success with
that size of programme, well have the potential to
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Like Mr Hubbard, he emphasises the importance

of Statoil securing big interests in non-Norwegian
acreage. A holding of 20-50 per cent also increases
its influence in exploration projects.
And Mr Maloney makes it clear that global
exploration will present major challenges, both in
terms of HSE and in what he terms above ground
risk in many countries.
In our international industry, we know a lot
about the risks that can be met below ground. But
risks associated with politics, transport and human
factors are equally important.
Knowing that he has the backing of top management is reassuring, he adds: It gives us good support. So does the whole GEX team. Theyre motivated, conscientious and dedicated to success. That
makes my job a pleasure.
In his view, the obvious approach is to concentrate on those parts of the world where oil has
already been found and where the big reserves lie.
But new areas containing large oil and gas fields
will also need to be identified for the future. Russia
could represent one of these.
Messrs Fjell and Hubbard both met Russian
president Vladimir Putin when he visited Norway
last November. In the long term, the INT head sees
Russia as an important place for Statoil to establish
commercial operations.
Our upstream, downstream and gas businesses
should all have opportunities to achieve things in
that country from the word go, he says.
In addition, he is looking at prospects in the
Middle East and Latin America. And one area
which stands out in terms of gas is north Africa.
His aim during 2003 will be to accelerate
Statoils hunt for oil and gas world-wide.

Challenging

construction
A pioneering spirit prevails on the
small island of Melkya outside
Hammerfest in northern Norway.
Statoil is building a gas receiving plant
there for its Snhvit development in
the depths of an Arctic winter.

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

22

LINKS

SNHVIT

T E X T

berit.bryne@statoil.com

P H O T O S

oyvind.hagen@statoil.com

Snhvit 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
Melkya in northern Norway.

23

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.

he snow is falling and the wind blowing

on Melkya, with the temperature
around freezing, as Magne Johansen
takes shelter behind a workshop wall
and lights a cigarette.
Construction work is a challenge when it has to
be pursued in round-the-clock darkness and Arctic
gales which can gust up to storm strength.
The wind chill has been known to make a temperature of -10C feel more like -36N. Such conditions are not unknown at 71N on the coast of
Finnmark, Norways northernmost county.
Wandering ptarmigan no longer dot the terrain
of the 70-hectare island. The flocks which flourished amidst the heather have flown, although the
odd bird still shows up. Their place has been taken
by machinery and men with sticks of dynamite.

Europes first facility for exporting liquefied

natural gas is taking shape on Melkya, with LNG
carriers due to start arriving there in a few years
time to fill their special spherical tanks.
But neither liquefaction plant nor sturdy jetty are
to be seen at present. The gas is still under the
Barents Sea away to the north-west.
Many hours remain to be worked both offshore
and on land before the wellstream can begin to flow
via Snhvits subsea production installations and a
160-kilometre pipeline to land.
The main challenge on Melky this past autumn
and winter has been to blast out and level large
masses of bedrock, flattening and expanding the
island to accommodate the plant.
Colleagues Lars Edvardsen and Rune Srlie
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walk over the rocky terrain in the local costume

muddy protective boots, orange jackets proofed
against wind and water, trousers over layers of thermal underwear, and hard hats pressed down on blue
cloths which protect ears and neck.
After spray-painting orange crosses on the
ground at set intervals, they jump into their drilling
rigs, manoeuvre them into position and bore to a
depth of eight metres.
Small piles of grey rock dust accumulate behind
the machines until they move on to the next cross.
It takes four minutes to drill a hole, and eight of
these rigs are in action.
Messrs Edvardsen and Srlie drive the biggest of
these, and the bottom six metres of the holes they
create will soon be stuffed with explosives.

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

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

Once the roar of the salvoes has died away, the

lumps of rock are lugged into a trench on the eastern
side of the construction road to help level the site.
By late morning, the darkness gives way to a
grey dawn which soon turns to dusk before the sky
goes black again. It is midday, but the lack of daylight presents no problems.
Drilling and digging, blasting and clearing, pounding and crushing continue around the clock as the
lorries hurry to and fro on slushy roads.
Huge dumper trucks and wheel loaders thunder
through the mud which covers the frozen subsoil,
one of them operated by Ole Ludvig Myklebust.
With his Caterpillar 990, he sorts rocks into
heaps of different sizes. His machine can handle
blocks of stone weighing up to 35 tonnes.

Mr Myklebust works a 12-hour shift from 06.00

to 18.00. He is constantly on the alert for threats
such as collisions and rockfalls, aided by 20 years
of construction industry experience.
Some 2.5 million cubic metres of bedrock are
being blasted out and moved around on Melky,
and the site only falls silent from Saturday evening
until Monday morning.
A total of 1.1 million cubic metres had been
moved from the start of construction work last July
until mid-December, with an average of 80 000
cubic metres being blasted free every week.
The weekly record was set in early December,
with 117 000 cubic metres shifted. Much of this
rock is used as infill on land or put in the sea as a
base for construction and export jetties.
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Blocks of stone graded by size are also being

used for building a big breakwater to protect the
plant against wind and waves from the north-west.
This structure will be the largest of its kind in
Norway.
Many machines are required for this gigantic
transfer of bedrock. Ten excavators are engaged at
the blasting site, with three loaders and five drilling
rigs helping to keep up the pace.
Alongside 18 dumper trucks elsewhere on the
island, two more excavators, a loader, a couple of
bulldozers and a crane toil to build the breakwater.
Various machines and barges are also being used
to ship away spoil, while the most important commodities brought to Melkya by barge are diesel oil
and explosives.

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

While each shift gets through about 17 000 litres

of diesel, the barges bring in 34 000 litres per day
from the Polarbase facility south of Hammerfest.
The aim is to keep the 100 000-litre storage tank
full most of the time, so that work will not be affected if the weather gets so bad that the barges cannot
make the journey.
Kenneth Hannu, Jouni Kilpeleinen and Tor
Befring are preparing to set off another salvo. With
explosives compounded on the spot, the project
gets through 20-25 tonnes per week.
Linde is the main contractor for building the land
plant. In his portable office, construction supervisor
Lennart Wedin from this German industrial group
has 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 accommodate the barge-mounted process plant, which
will be built elsewhere and towed to Melkya on a
vessel measuring 154 by 54 metres.
Construction of the tank farm and administration
centre is due to start in April.
A Dano-Norwegian joint venture between AF
Spesialprosjekt and E Phil & Sn has the largest
workforce on the island, and is responsible for the
site preparation.
Another partnership, the VS group linking contractors Veidekke and Selmer Skanska, is building
the road tunnel which will link Melkya with
Meland on the mainland.
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Mr Wedin and the various sub-contractors all

ensure that the strict health, safety and environmental standards set both by them and by Statoil are
observed during the construction period.
Risk assessments, safe job analyses, management
inspections, safety checks and HSE inspections are
carried out on a continuous basis.
And a close eye is kept on the weather. But the
schedule has been maintained so far despite the climatic challenges even though jetty work has been
interrupted by high winds and seas.
Well over 500 people have been employed on
the Melkya project during the winter, with 150 at
home, 150 off-duty and 200 out on the site at any
one time.
Even more contractors are due to arrive on 1

Gas by remote

control
The Snhvit development embraces the Snhvit,
Albatross and Askeladd fields in the Barents Sea, and
ranks as the first in Europe based on LNG production.
This project utilises new technology, and is extensive
and complex.
Being implemented in four stages, the offshore part
embraces subsea production installations with 21 production wells and one for carbon dioxide injection.
These facilities will be remotely operated from
Melkya, where the unprocessed wellstreams are also
due to come ashore through a 160-kilometre pipeline.
Carbon dioxide, water, natural gas liquids and condensate (light oil) will be stripped from the gas in the
treatment facility.
While the carbon dioxide gets piped back to the field
and injected below ground, the natural gas is due to be
liquefied and exported by ship.
At 1 January 2003, the estimated cost of the Snhvit
project was more than NOK 45 billion.
Operator Statoil has a 22.29 per cent interest in the
field. 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 Svenska
Petroleum 1.24.

Melkya 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)

April, with a peak of 1 200 set to be reached in

2005. However, most of the site preparation should
be completed by the end of this year.
Statoil will be building up an operations organisation totalling some 180 people in Hammerfest,
and recruitment for this team started in early 2003.
Production and export of LNG is due to start in
the second half of 2006, with carriers shipping about
70 consignments a year to customers in southern
Europe and the USA until roughly 2030.

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28

An eye
on the
ball
Norwegian players both
male and female are making their mark on the worlds
soccer pitches. And Statoil
is part of the team.
Ole Gunnar Solskjr and his present team, Manchester
United, draw capacity crowds at their Old Trafford ground.
(Photo: Erik Hannemann, VG)

29

New soccer heroines such as Norways 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 womens league.

Interest is growing in Dagny Mellgren and

her colleagues in the Norwegian womens
soccer team.

STATOIL

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MAGAZINE

eople do sometimes come up to me in

the street in Boston or ask for my
autograph, Ms Mellgren observes.
Maybe Im a model to some of
them?
The young football ace has returned home to
lgrd south of Stavanger when we meet, and is
enjoying a quiet time with family and friends and
training with her former club, Klepp.
She has been a fixture on the Norwegian
womens team usually around the opponents
goal for almost four years. The big challenge now
is the World Cup in China.
Norway will be one of 16 countries sending
womens teams to this tournament, being played in
five different cities between 24 September and 11
October.

The final is due to take place in Shanghai. China

was also the venue for the first official womens
soccer World Cup in 1991.
Such participation underlines the rapidly growing interest in womens soccer, confirms Rakel
Rauntun, international coordinator for the womens
game at the Norwegian Football Association
(NFF).
When Norway played a friendly match against
Germany last September at Grimstad south of Oslo,
for instance, the small local stadium had not seen
such a crowd for 30 years.
Gates of 15-20 000 are common at the top
womens games in countries like Sweden, France
and Germany, Ms Rauntun confirms. The
Grimstad match, won 3-1 by the Germans, drew
4 000 spectators.
This trend reflects a steady improvement in the
quality of the womens game during recent years.
And a growing number of league fixtures are being
shown on Norwegian national TV.
A recent survey for the NFF by opinion pollster
MMI aimed to identify what attracted people to
attend soccer matches.
The answer was unambiguous, Ms Rauntun
notes. People go when their local team is doing
well in the league. Six out of 10 respondents
also wanted more media coverage of womens
soccer.
Offering top-class soccer where people live is also
a factor in Norway. A number of international
games have accordingly been played outside Oslo
in recent years.
These contests are important for recruitment,
and theyve also been fun to play, comments Ms
Mellgren.
Decentralising international matches could be

one of the reasons why the number of womens

teams in Norway expanded by five per cent during
2002, from 3 754 to 3 951.
Ms Mellgren and her national teammates have
long been preparing for the World Cup through
training, friendlies and tournaments. Expectations
for the Norwegian women are high they are reigning Olympic champions.
Although Ms Mellgren is only 1.65 metres tall,
she is quick on her feet and dangerous in the goalmouth. The Americans learnt that in the final at the
Sidney Olympics in 2000, when she scored the crucial goal to earn Norway a 3-2 win.
Nor has she been given much chance to forget
that achievement. After the Olympics, she received
a professional contract in the USA.
Her team for the past two seasons has been the
Boston Breakers, one of eight clubs in the US
league. Norwegian national teammate Ragnhild
Gulbrandsen plays for the same side.
Its great to be playing in the worlds only professional league for women, which has the reputation of being the best, says Ms Mellgren. Ive
learnt a tremendous amount there.
The US season runs from April to mid-August.
Her life then consists largely of training, travel and
matches.
She shares a home with three teammates, and
spends most of her limited free time with friends
often at the cinema or following soccer developments elsewhere. Her favourite team is Englands
Manchester United.
Every so often, the Breakers women turn up at
events on behalf of the club, meet people and sign
autographs. That is hardly negative for recruitment.
Norwegian clubs have something to learn here,
Ms Mellgren thinks. The Americans are very good
at putting the team in the public eye, and individual
players are heavily promoted.
The Breakers attract an average of about 8 000
spectators for home games. Many of these are
young girls who play soccer themselves, and who
bring their families.
Right now Im keen to carry on playing, says
Ms Mellgren, who was named as her teams best
attacker in the 2002 season. Soccers both a hobby
and job.
Eleven goals in 20 games indicate that she is an
important player for the club.
Going professional has brought her out into the
world and provided enough money to pay the
bills, but is unlikely to make her rich at least
from playing soccer.
Men still stand to earn a lot more than women
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Fast and dangerous in front of the goal, Ms Mellgren is a soccer

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

from professional soccer. This means, for example,

that a male player can save a lot more before age
ends his career.
He can live thereafter on a combination of these
accumulated funds with PR stunts and serving as a
commentator.
His female counterparts must think about another career once their days on the pitch are over. So
they educate themselves, often while playing.
Virtually all the members of Norways national
womens team are accordingly either studying or
already have an alternative profession.
An education is important, affirms Ms
Mellgren. Theres a life after soccer.
She graduated as a radiographer from the
University of Bergen in February, although a US
playing career reduced her attendance at lectures
and extended her studies beyond the usual three
years.
Studying alone was demanding but manageable,
Ms Mellgren says modestly. When she finally
hangs up her boots, she can look forward to a whitecoated hospital or clinic job. But that is still quite a
few years away.

LINKS

SPONSORSHIP

T E X T

bente.bergoy.miljeteig@statoil.com

P H O T O S

Hkon Vold

WEB

http://www.bostonbreakers.com

SITES

http://wwww.fotball.no

Dagny Mellgren has an Olympic gold medal for soccer and a US professional contract with the Boston Breakers. The 24-year-old also plays in
Norways national team, a favourite to win the womens World Cup in
China this autumn.

It took Ole Gunnar Solskjr just 18 months to advance

from Norways second division to a place on the team at
Manchester United, one of the worlds most famous
soccer clubs.

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r Solskjrs career has had a fairytale touch, and he freely admits

that playing for Englands
Manchester United is the dream of
his life.
Imagine being able to make a living by doing what
you like best? he says. I sometimes have to pinch
myself and think about whats happening to me.
We have met following his recent cooperation
agreement with Statoil (see separate article), at
Uniteds ultra-modern Carrington training centre in
the countryside near Manchester.
Nobody gets in here without an appointment.
Before the boom is lifted on a narrow road through
fields and over a small river, guests must identify
themselves and their errand.
Mr Solskjr went straight from playing as an
amateur to one of the worlds best-known soccer
teams.
The club was interested in signing me up, he
says. I saw this as an opportunity which comes
along just once in a lifetime.
Joining such a large and professional organisation was obviously a special experience, but I
gained a very good first impression. Everything
was well organised, with a home and car quickly
provided. The atmosphere was good and people
easy to get on with.
He did not feel pressured by excessive expectations. They took me on as an unknown quantity. It
took me six months to become a member of the
team on a more or less regular basis.
The fairy tale began on a patch of open ground
at home in the west Norwegian fishing port of
Kristiansund, where Mr Solskjr played soccer
every day.
It was a hobby to me and a natural part of my
daily life, he explains.
At the age of 16, he joined the A team in seconddivision club Clausenengen and scored 86
Norwegian league goals over the following four
years.

Previously an amateur player, Mr Solskjr felt welcome at

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

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

I was with Clausenengen for a long time. It had

a great atmosphere, and I stayed until Id learnt all
I could. We had a good coach, so the leap to Molde
wasnt that big.
While at this west Norwegian club, he became
the top scorer in the Norwegian premier league for
the 1995 season, with 20 goals to his credit.
Mr Solskjr also praises ge Hareide, then the
Molde coach, for inspiring him to advance a few
more steps in his career. He got me ready to tackle new challenges at United.
In his view, he has become an even better player
after the move across the North Sea.
When youre associating daily with some of the
worlds best footballers, you naturally pick up a lot.
These could be small details like how long you
should hold onto the ball and how to pass.
You gain experience from being on a winning
team which achieves success through hard work. It
has to be earned. You can never rest on your laurels.
Its the next match which counts.
Mr Solskjrs father is a keen United supporter,
and videos all the teams games which takes care
of the historical aspect on behalf of the family.
His greatest experiences so far include the 10
days at the end of the 1998-99 season.
Thats when we won the treble first the English
premier league, then the Football Association (FA)
cup, and then the European Champions League
against Bayern Munich of Germany.
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He clinched the European final in the last few

seconds of the game, with a toe poke which put the
ball into the top of the net behind German keeper
Oliver Khan. That sent United into ecstasies,
while Bayerns players lay exhausted on the
ground.
Mr Solskjr also scored in his debut for United
against Blackburn in August 1996: That game was
a two-all draw. I had two-three chances at goal, and
landed one of them.
Scoring goals is unquestionably an important
part of his job. And the spectators certainly appreciate his ability to find the back of the net.
But soccer is a team game, and Mr Solskjr says
that good colleagues are crucial for his success on
the field.
Together, weve won the premier league four
times, the FA cup once and the Champions League
once. 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-

LINKS

SPONSORSHIP

T E X T

ragnar.asland@statoil.com

P H O T O S

Hkon Vold

Ole Gunnar Solskjr is a professional footballer with one of the worlds

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. Hes a fine lad, who gives his all for the
club and shows a big will to win.
Although competition for a place on the team is
tough, Mr Solskjr is pleased at the success which
his fellow players have achieved.
The team spirit and sense of comradeship are
very strong. Many of the others have grown up
together and may have played together for years.
Our boss, Alex Ferguson, also puts a lot of emphasis on finding players who gel with each other.
Having Mr Ferguson as my coach is something
Ill remember with pleasure all my life. Ive learnt
an incredible amount from him, and have seen how
he works. Hes good at handling people and has a
clear focus on the future.
Mr Solskjr is conscious of his own hero status,
and devoted plenty of time to a meeting with Statoil

employees and their children after a game at

Uniteds Old Trafford in early December.
I think its great to meet people whore genuinely interested in soccer, he says. And I know
it makes a lot of them happy if I take the time to
chat and give autographs.
A similar attitude has been expressed by Mr
Cantona, his former teammate.
Hes said that meeting some of their favourite
players is a once-in-a-lifetime experience for most
people. You mustnt disappoint them by hurrying
away.
Asked what kind of model he wants to be for
soccer players and others of all ages who look up to
him, Mr Solskjr recalls his own interest in the
game as a young boy.
I played, watched others and read about soccer,
and I had my idols. But I havent been anyone but

myself over the years, and dont see myself as having a special role.
My self-confidence has grown and Ive
become ever more familiar with the game. I hope a
lot of young people will go on playing soccer as
long as they enjoy it, and that those who want to
make a possible career in the game take one step at
a time.
Despite his status as a star player, he feels under no
pressure to live up to peoples expectations or to his
image as a nice fellow and every mother-in-laws
dream.
I dont see myself as some kind of shining
example. But its naturally gratifying to know that a
lot of what I do can make other people happy.
Mr Solskjrs web site (which is in Norwegian
only) gets 300 000-400 000 hits every month.

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

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People ask about everything imaginable, and he

enjoys providing them with answers.
Many log on to congratulate him with a victory
and to send well done messages, while others
want training tips. He tries as best he can to answer
and give advice.
But he is less enthusiastic about other aspects of
being a celebrity, including the lack of anonymity.
I dont like it when my wife and son get photographed on the beach during our holidays. I feel
thats quite wrong. And Im not keen on magazine
articles of the at home with... type.
What goes on inside the four walls of your
house is private. When Im with my family, nobody
else has any business there.
On the other hand, he can walk down the street
in Manchester and visit the local supermarket with
his family without swarms of people wanting to
talk to him or get his autograph.
I dont have any problems with that. People
often just come up to me, clap me on the shoulder
and say well done after a game. I feel theyre genuinely pleased on my behalf.
Mr Solskjr is also an ambassador for the UN
Childrens Emergency Fund (Unicef), which uses
celebrities world-wide to draw attention to child
living standards in developing countries.
He is proud of this prestigious role, and regards
it as a mark of distinction to have been asked to
take it on through Uniteds links with Unicef.
My most important job is to explain to others
what Unicef stands for and what a fine job it does,
Mr Solskjr explains. The organisation uses me in
its promotional work, for instance.
Together with some of his teammates, he has
been on a visit to Thailand.
It was a real eye-opener to see conditions for
children there, and how the work done by Unicef
has given disabled girls a new start in life.
He tries to live up to the values and attitudes
instilled in him by his parents, who raised him to
demand something of himself.
Ive given my all to get where I am today. My
parents have been role models. Ive no time for
people who sit in pubs and boast about how they
could be better footballers than others, but whove
never made the effort needed to prove it.
It is too early to say whether his son Noah will
inherit the same interest in soccer. But he accompanies his father to games and wears a United strip.
For his part, Mr Solskjr takes as much pleasure
in playing today as when he was a small boy. He
started developing his winner and competitive
instincts early.
When I was seven and played junior league
soccer, I didnt like collecting a participants medal
or diploma if we failed to win a tournament.
Today, he is willing to let Noah beat him at a
pinch.
His contract with United runs until 2005. That
leaves him many games to play and trophies to win.
But what he might do when his playing days are
over remains an open question.
Perhaps I might opt for a career in the oil industry, he observes with a sly smile.

Onside
with sport
A number of collaboration deals with
Norwegian cultural and sporting organisations
or individuals have been helping to strengthen
Statoils image since the early 1990s. Soccer
holds a key place in this programme.
On the sporting front, the group currently has
agreements with the Norwegian Football
Association (NFF), the Norwegian Olympic
Committee and Confederation of Sports (NIF),
and Manchester Uniteds Ole Gunnar Solskjr.
Statoil has collaborated with the NFF since
1993, and its deal with this association was
extended for a further three years last autumn to
the end of 2005.
This also means that the group remains a
member of the Team Norway group of NFF
sponsors, and will continue to be the principal
sponsor of the Norwegian womens soccer team.
The latter is the reigning Olympic
champion from the Sydney games in 2000, and
among the favourites to win the womens World
Cup in China this autumn.
Soccer currently ranks as the fastest-growing
female sport both in Norway and internationally,
and about 75 000 Norwegian women currently
play the game.
According to Fifa, the international football
federation, more than 21 million female soccer
players were registered around the world in
January.
The collaboration with the NFF means that
Statoil can promote its logo on arenas and during coverage of soccer matches on nationwide
Norwegian TV channels.
Oddvar Hie, marketing manager for
Statoils promotion and media unit, is very satisfied with the NFF deal. He notes that it also reinforces the groups other sporting agreements.
The partnership with the NIF allows Statoil to
support youth sports and the work done in
Norways many sports clubs.
Were holding a draw twice a year for player shirts. These go to children and young people
aged 13-16 who participate in team sports, Mr
Hie explains.
Sporting challenges are societys challenges observes Aina Srhus, project manager
for sports sponsorship in the same unit. We
want to demonstrate our social responsibility by
supporting mass participation sports.
A total of 5 000 player shirts were handed out
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in two rounds during 2002. All clubs affiliated

with the NIF which offer soccer, handball, volleyball, indoor bandy or basketball could apply.
The response to this offer was overwhelming,
Ms Srhus reports. Almost 4 000 people logged
onto the sponsorship section of Statoils web site
to read about the free sportswear.
Teams which were successful in the two 2002
draws hailed from all parts of Norway.
At the same time, Statoil employees could
take part in a draw for a complete sports outfit
for their own children, if these youngsters
belonged to organised teams in the sports listed
above.
Signed last autumn, the collaboration deal
with Mr Solskjr runs to the end of 2004 but can
be extended. It commits the striker to participate
in Statoil promotions, from campaigns and
advertising to appearing at events.
Statoil employees, for instance, are able to
attend home games at Uniteds Old Trafford
ground and to meet Mr Solskjr on the following day.
The soccer player is well known in Norway
and internationally, and represents a brand name
in himself as a prominent media personality, Mr
Hie observes.
Hes also a very good footballer with a professional attitude to his sport. He is known for
his wholesome values and has a positive image.

The Norwegian womens soccer team literally backed by

Statoil.

Playing the

trading 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 markets premier division as a managing director
at Morgan Stanley. Few Norwegians have enjoyed a bigger career
in the international oil industry.

occer has always been close to Mr

Refviks heart, but oil gained a bigger place in his life. He made a mark
in both areas when passing through
Statoil on his way to an international
career. While helping to build up its oil trading
offices in London and New York, he was involved
in establishing several soccer teams in the group for
both men and women.
The son of a fisherman, Mr Refvik grew up in
poor circumstances near Mly in the county of
Sogn og Fjordane. Godliness and thrift were important values.
In addition to Christianitys regular 10 commandments, his father imprinted an eleventh on the
boy you must not boast about yourself.
After my parents, soccer has had the biggest
influence on my development and made me what I
am, says Mr Refvik. It taught me the huge importance of functioning in a team.

Getting an interview with the trader is not easy. He

keeps a low profile.
Come to New York by all means, but then
youve got to talk to my bosses and colleagues, he
told me with becoming modesty and great hospitality.
Sitting in a restaurant near Times Square, we
watched 2002 end and 2003 begin. Hordes of people milled about outside, with the moving cars

LINKS

THE INTERVIEW

T E X T

bjorn.vidar.leroen@statoil.com

P H O T O S

rjan Ellingvg

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..

weaving an energy-hungry carpet of light through

the cold winter evening.
As an oil trader, Mr Refvik is not concerned
solely about what 2003 will bring. His thoughts are
focused even further ahead.
Weve already booked the first contracts for
2013, he told me.
That kind of long-term perspective calls for predictability but who can forecast what oil prices
will be in a week, a year or a decade?
The answer lies in risk management, Mr
Refvik explained. One of the most important
things we do at Morgan Stanley is to offer our
clients control and management of risk.
With overall responsibility for energy, managing
director Neal Shear is one of Mr Refviks superiors.
He was a metals trader when the company decided
in the early 1980s to start trading crude and refined
oil, and became involved from the start.
With the dramatic oil market developments of
the 1980s, clients needed assistance in managing
the big risks which came to be associated with fluctuating price trends.
The aviation industry offers a good example of
risk management, Mr Shear suggested, since airlines are heavily dependent on predictable fuel
costs.
Such predictability can be purchased for a week or
a year ahead, and Morgan Stanley is one of the
players which offer this kind of hedging.
Lets say an airline needs a stable fuel price of
USD 1.20 per gallon for a week, a month, a year or
several years, Mr Shear told me. We get it an
appropriate deal.
This means that the client pays USD 1.20
whether the price goes up to USD 1.40 or falls to 90
cents.
That kind of hedging is all a matter of spreading
and sharing risk, he added. The market is competiSTATOIL

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tion-driven and transparent, which benefits the end

user.
The global oil trading system which used to prevail, with fewer players and long-term contracts,
lacked the competitive element.
In a market which can sell many hundred times
more oil than the physical volume ultimately delivered, the marketplace becomes the focus of more
attention, greater transparency, increased analysis
and stronger competition.
Oil is the worlds most important trade commodity, and associated with high risk and capital
commitment.
The airlines are dedicated to carrying passengers quickly and efficiently, Mr Shear observed.
They dont have the capacity to accept the heavy
risk presented by fluctuating oil prices.
Here Mr Refvik intervened in the conversation to
point out that risk management is important in
todays energy market, but has both upsides and
downsides.
Norways Saga Petroleum hedged part of its oil
production at USD 12 per barrel in the late 1990s,
he recalled. When oil prices rose sharply, this didnt exactly seem an outstanding decision. But then
Saga no longer exists either.
He concurred with Mr Shears message and
examples: When we trade aviation fuel at a fixed
price for a client, we hedge by trading other oil
products. Our aim is to maintain a balanced energy
book at all times.
At work, Mr Refvik sits in the centre of a big
room filled with electronics and alert traders. When
he finally strolls into a vacant office, he explains
that the trading floor is his life.
Not for him an office of his own. He is not concerned with the status it might confer, but is well
aware of the distance created between a cubbyhole
and the seething life of the trading room.

Mr Refviks word is his bond. His whole image

is built on openness, integrity and trust. They say
that when he began trading oil in New York, a 16page contract was usually written for each deal. But
the young Norwegian took a different approach.
Players in the market learnt to trust him. They had
no need to write contracts all the time, which reduced
the amount of paper around him. And this in a market where it is difficult to make a name for oneself.
I suppose I must admit that Ive managed to
earn respect despite being a foreigner in the USA,
he eventually admitted.
In his view, it is important to think of the client
and establish a good relationship right up to the
energy end-user.
I think that depends on never starting the day at
work by asking how much you can make for your-

self. After the frightful examples of egotism and

breach of faith weve witnessed, personal attitudes
and values are set to become more important in
business.
Thatll 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 oil
industry, having joined Statoil in 1981 straight from
the Norwegian School of Economics and Business
Administration in Bergen.
Initially working on finance and planning, he got
the opportunity in 1984 to help build up oil trading
in the group. That proved decisive for the young
economist.
Ive been extremely lucky and very privileged,
he commented when looking back.
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He noted what a fantastic opportunity was handed to him as an economics graduate by joining
Statoil, which quickly expanded into Norways
largest and most important company.
What makes a good oil trader is something Mr
Refvik has asked himself for many years.
The simplest answer Ive come up with is
curiosity. This business challenges your head, your
guts and your heart - for analysis, instinct, and the
joy in and love of the job respectively. You need all
three to succeed.
He moved to New York as a Statoil oil trader in
1987, having already spent some time in London.
After three years with the group in the USA, he
decided against returning to Norway.
An offer to join Morgan Stanley in 1990 proved

too tempting. His new employer gave him the job of

building 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, the
financial services group has oil trading operations
in London and Singapore.
Olavs built up an organisation which aims to
get as much as possible out of a barrel of oil, and is
notable for his grasp of every detail affecting the oil
market, says trader Mark Cain.
Such knowledge does not come of its own
accord. People have to be early birds to get the most
worms, and must stay in good physical shape to survive the frenetic pace.

Mr Refvik visits the gym in Morgan Stanleys

Broadway building three times a week. And he usually leaves home at 05.30.
He reads the morning papers on his one-hour
train ride from Connecticut to Manhattan. At the
office, he picks up international news on the internet including the Norwegian press.
Keeping abreast of the latest developments is
essential in my job, he told me.
His focus is on everything which might conceivably influence the global energy market so he has
the Norwegian oil minister on his radar screen
alongside George Bush and Saddam Hussein.
Mr Refvik expects natural gas to take over much
of the dominant role currently held by crude in the
world market for energy.
For that reason, he believes it would be unwise
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to link gas and oil prices because demand for the

former is set to increase.
And he sees many dangers in the USA the
worlds largest energy consumer which could
spark fresh crises in this field.
When we had the big debate on Americas
energy position following the heating oil crisis in
2002, proposals to speed up the conversion from oil
to gas won great attention.
Thats a hopeless discussion, because increased
US dependence on gas will boost prices and
encourage new crises simply because gas
resources in America are limited.
On the other hand, he finds it difficult to understand how Norway as a major gas exporter to
Europe could find itself with a major electricity
crisis during the past winter.

Photo: Samfoto

SHOOTING FOR

ZERO

A 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.

he CTour solution has helped to convince

researchers in Statoil that they can hit the
clean-up target set for discharging waste
water to the sea by the governments tight
deadline.
Tests on the groups Statfjord B platform in the
North Sea show that this technology can remove
more than 80 per cent of oil and chemical residues
from produced water.
Other approaches to cleaner discharges which
are currently attracting attention include finding
less environmentally-harmful replacements for
chemicals used offshore.
Keeping the sea clean is a key requirement for
Statoil. And despite almost 40 years of offshore
operations on the Norwegian continental shelf
(NCS), these waters remain generally unsullied.
A recent report from Norways joint government-industry environmental forum concluded that
pollution on the NCS is well below the assumed
danger line for marine life.

Weight is given to this finding by the forums

membership, which includes the Norwegian Oil
Industry Association (OLF), the Norwegian Union
of Fishermen, green campaign group Bellona, the
Norwegian Pollution Control Authority and the
Norwegian Institute of Marine Research.
Produced water emerging from the reservoir
together with oil and gas represents the most important source of potentially polluting discharges to the
sea by the offshore industry.
This water is separated out on the production
installations, treated to remove residual oil and
chemicals, and released to the sea.
The challenge presented to Statoil by produced
water is huge, particularly on its mature North Sea
fields such as Statfjord and nearby Gullfaks.
It is a long time since water exceeded the share
of oil in the Statfjord wellstreams. Daily crude output from this field has fallen from a peak of rough-

ly 800 000 barrels to 200 000, which is accompanied by almost a million barrels of water.
The latter is simply returned below ground on
some fields. But any water which has to be discharged must be properly cleaned, and various
treatment methods have been adopted by Statoil.
Continuous efforts are nevertheless being made
within the group to find optimal solutions for each
of its fields, and this drive underlies the development of CTour.
A long-term test of the technology is now being
conducted on Statfjord B, reports process engineer
Per Gerhard Grini. He is responsible for Statoils
research into mature field production.
This trial aims to treat about 313 barrels (50 cubic
metres) per hour, and is being paralleled by efforts
to implement the method in parts of the C platforms process plant.
CTour could take us a long way in the right
direction, says Dr Grini. It is effective, with the
equipment cheap to both install and operate.
More testing is needed, but this could be the
solution we select for Statfjord as a whole. Its also
highly relevant for other fields in the longer term.
The Norwegian authorities currently demand
that water released by the offshore industry should
contain no more than 40 parts per million (ppm, or
about a milligram per litre) of oil residues.
Statoil already keeps well within that ceiling,
and seldom exceeds 20 ppm. But CTour makes it
possible to get this content as low as three-four
ppm.
Dr Grini explains that the method involves
injecting the produced water with a condensed gas
which works as a detergent, and passing the mix
through a hydrocyclone.
This device uses a centrifugal process to separate
out the condensate again. Oil and chemical residues
attach to that substance and are removed along with it.
So a platform must have hydrocyclones installed
STATOIL

41

MAGAZINE

to use the system. Such equipment is found on all

three Statfjord installations, but cannot get residues
below 15-20 ppm on its own.
The industry is also working continuously to
identify more environmentally benign replacements
for chemicals used in drilling, downhole working
and production, says Stle Johnsen.
With a doctorate in environmental chemistry, he is
responsible for Statoil research programmes relating
to health, safety and the environment (HSE).
More than 1 000 different chemicals are used offshore, but roughly 90 per cent of the substances discharged from Statoils fields are regarded as nonhazardous.
Another nine per cent are defined as environmentally acceptable, with only 0.5 per cent presenting a
challenge. This last category includes corrosion
inhibitors.
But even non-hazardous substances can be harmful in large quantities. One example is hydrogen

LINKS

TECHNOLOGY

T E X T

alice.o.bore@statoil.com

P H O T O

oyvind.hagen@statoil.com

Statoil is committed to meeting the Norwegian governments target of

zero harmful discharges to the sea by the end of 2005. Offshore operators in Norway are spending heavily to develop cleaner technologies.

sulphide (H2S) scavengers, essential on some fields

to keep wells and pipelines open.
These chemicals are not basically hazardous, but
are used in such big volumes on Gullfaks, for
instance that they pose an environmental risk,
explains Dr Johnsen.
Several approaches are being pursued by Statoil
to reduce the pollution risk posed by scavengers and
corrosion inhibitors, including both volume cutbacks
and replacement.
In addition, the group is seeking better environmental data on chemicals and technology which
makes the compounds more efficient and thereby
allows their consumption to be reduced.
Our environmental impact factor (EIF) tool
allows us easily and regularly to calculate the potential effect of discharges, Dr Johnsen notes. Thats
a big help in prioritising measures.
He explains that the EIF is a computer model
developed by Statoil in cooperation with several
other companies to reflect the environmental status
of the sea around offshore installations.
It compares the level and composition of discharges with the carrying capacity of each sea area,
and has now been adopted for all Statoil fields on the
NCS.
The model indicates which chemical substances
in a given discharge enhance the threat of environmental harm, and how big that risk is for the whole
discharge.

Measuring such risk with a view to reducing it

forms another prong in Statoils strategy for reaching
its goal of zero environmentally-harmful discharges
by the end of 2005.
Field measurements from our environmental
monitoring programme give no indication that produced water released from our operations harms the
marine environment, says Dr Johnsen.
But such data give no guarantee that damage
wont happen. We feel were on reasonably safe
ground, but might naturally be concerned about the
huge volumes of water being discharged.
We cant simply sit back and be satisfied with
the present position. Our aim is to reduce even further the risk that discharges could have harmful
effects.
Production chemicals are one of three categories of
substances found in discharged water, the others
being oil residues and dissolved oil components such
as aromatics and alkyl phenols.
Dr Johnsen emphasises that research in this area
must reflect natural conditions. Sea motion, water
depths and fish movements are very important for
the possible impact of discharged substances.
Measurements in the sea around offshore installations naturally provide a more accurate picture than
laboratory tank trials.
While chemicals long presented the biggest challenge, the steady adoption of green replacements
STATOIL

42

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means that the dissolved components are now the

main headache.
Some of the alkyl phenols are designated as hormone inhibitors because they have the same effect
as hormones on marine organisms and can thereby
reduce reproductive ability.
However, the alkyl phenols most commonly
found in produced water are easily biodegradable in
seawater over time and have no hormone inhibiting
properties, explains Dr Johnsen.
The types which have been found to display
such properties are present in very small quantities.
All the same, the precautionary principle requires us
to pay full attention to these invisible substances
when lots of water is being released.
This is where CTour comes in again. Dissolved
components are not removed by straight hydrocycloning, but up to 80 per cent of them can be
stripped out using the new technology with the
right condensate quality and the method fine-tuned
to the process involved.
The best solution of all would obviously be to
inject all produced water back below ground, particularly where this could help to drive out more oil,
says Dr Grini.
But he notes that injection normally requires
power, which in turn releases more carbon dioxide
to the air. So a total assessment must always be
made.
Injection is being pursued or planned on a num-

ber of Norwegian offshore fields, he adds. But this

process boosts reservoir pressure.
On Statfjord and other mature producers, the
need is actually to get that pressure down in order to
recover the large volumes of condensed gas which
such fields contain.
The only possibility for employing injection in
these conditions will be if it can use sub-surface formations other than the reservoir.
Statoils Kvitebjrn development in the North Sea
will serve as an environmental model when it comes
on stream in the autumn of 2004.
Produced water and drill cuttings are to be pumped
back below ground with the help of reservoir pressure, which eliminates discharges to the sea and keeps
down emissions to the air.
All Norwegian offshore field operators are required
to report to the authorities by 1 June on their strategies
for reaching the zero harmful discharge target.
Following a recent White Paper on protecting the
riches of the seas, the Ministry of Petroleum and
Energy launched a drive to boost knowledge about
the long-term impact of offshore discharges.
This project is being pursued jointly by the
Research Council of Norway, the OLF and the government.
According to Dr Grini, Statoil and the rest of the
industry have also devoted substantial resources to
this area over a long period.

Were taking the lead and have managed to find

a number of good solutions. But we still face difficult
issues, particularly on fields in the late production
phase. This work takes time.
Dr Johnsen has registered great interest in the EIF
across the industry, and sees it as an important contribution by Statoil and its collaborators to the joint
effort to reduce harmful discharges.
The group is now concentrating on developing this
tool even further. Two new variants are on the way
to measure drilling-related releases and acute discharges respectively.
Ensuring synergies between the industrys efforts
and publicly-funded research will be important in
future, Dr Johnsen emphasises.
He hopes that this can establish a good overview
of the position relating to discharges, in order to
implement the right countermeasures.
We and the authorities are pursuing the same
goal, and were working systematically on strategies
for all our fields, he comments.
Although the 2005 target remains a big challenge, were optimistic. But we see no discharges at
all as unrealistic. That might become a reality on new
developments, but many producing fields are wholly
dependent on being able to release water.
However, well be making sure that such discharges dont present any threat to marine life.

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43

MAGAZINE

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)

Status

Performed well in 2002

Good results reported by Statoil for 2002 reflect

Statoil passed important milestones in its inter-

He called particular attention to a strengthening

more efficient production operations by the group

national exploration and production operations dur-

of Statoil's position in important markets such as

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

ing 2002.

Poland and the Baltic states, and the successful

"We're delivering higher production while simul-

"It's particularly gratifying that we secured our

taneously enhancing our efficiency," commented

first operatorship in Iran and strengthened our posi-

chief executive Olav Fjell when last year's figures

tion in Venezuela," Mr Fjell observed.

were presented in February.

sale of the Navion shipping arm.

Health, safety and the environment presented a
mixed picture during 2002, Mr Fjell noted.

"Equally pleasing is the great progress made in

"The figures for personal injuries and serious

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

Azerbaijan, which has long been an important area

incidents showed positive progress, but we suf-

results place us among the industry's best per-

for us. And exploration results off western Africa

fered six fatalities in connection with our business.

formers in terms of profitability."

were positive."

That's six too many."

Statoil's oil and gas production in 2002 averaged 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.

Operations on the Norwegian continental shelf

also yielded good results.

Statoil has accordingly instituted additional

measures to ensure that its operations become

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

even safer.

Fjell reported. "A five per cent increase in output

The group achieved a net profit, adjusted for

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

special items, of NOK 16.7 billion as against an

ations became even more efficient."

adjusted NOK 15.2 billion the year before.

"We made progress in the UK gas market, which

Downstream activities faced difficult market

is the biggest in Europe, and gas sales also rose

conditions during 2002, but Mr Fjell was well satis-

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

fied with the big progress made in results towards

for our long-term contracts."

the end of the year.

STATOIL

44

MAGAZINE

Statoil's annual report and accounts are due to

be published on 27 March.

New operatorship
in Venezuela
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.

Were looking to continuing these relationships as

we move ahead together on Plataforma Deltana.
With our joint success, this project can make a significant contribution to Venezuelas offshore industry
development.
Statoil currently has interests in two Venezuelan pro-

It has committed to drilling three exploration wells

duction licences 15 per cent of the Sincor heavy crude

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

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

million to define the resource potential of the area.

oil field in Lake Maracaibo.

Weve worked closely over many years with

The Plataforma Deltana assignment is the second

Venezuelas Ministry of Energy and Mining, state oil com-

international operatorship secured by Statoil in recent

pany Petleos de Venezuela and a wide range of supply

months, following phases six-eight on Irans South Pars

and service companies, says Richard Hubbard, execu-

gas field (see page 46).

tive vice president for International Exploration &

Production.

Breakthrough
with LPG in Asia

Boosting recovery
with 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-

Long-term contracts worth about NOK 1.5 billion secured

Such efforts include shipping Japanese analysis equip-

by Statoil in Japan and China mark a breakthrough for the

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

group's sales of liquefied petroleum gases to Asia.

ods accepted in Japan.

A total of 600 000 tonnes of LPG have been sold

under three deals, including 400 000 tonnes for Japanese

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

Mr Breivik regards Japan and China as the world's

most important import markets for LPG.

with this solution," explains Tone Botnen, senior reservoir

engineer in Statfjord's reservoir exploitation sector.

He also believes that Statoil has gained a strong posi-

"One of its wells produced about 1.5 million barrels of

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

tion globally with this commodity through the group's

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

Marubeni, while ChevronTexaco subsidiary Caltex is buy-

access to large volumes, unique infrastructure and able

Snorre's reservoir properties are similar to those found on

ing 100 000 tonnes for delivery to China.

trading organisation.

Statfjord."

industrial group Mitsui.

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 Krst 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

Norway ranks as the world's third largest exporter of

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

LPG after Saudi Arabia and Algeria, with Statoil responsi-

nology is based on adding a foaming agent to the water

ble for the majority of the country's sales.

being injected into the field.

The group's share of these exports totals about five

When gas is subsequently injected, foam blocks the

million tonnes per annum, delivered from Mongstad near

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

Bergen. These plants have big storage facilities and mod-

parts of the formation to displace oil towards the produc-

ern ports.

tion wells.

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

"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 expectations."
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-harmful substances, with the foaming agent adsorbed in the formation.

STATOIL

45

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Iranian assignment secured

Statoil and Iran's Petropars signed a participation agree-

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

Established in 1998, this company is involved in six of

ment in October relating to the South Pars gas develop-

being exported to other Iranian oil fields for injection as

the first 10 phases awarded for the development of the

ment in the Persian Gulf.

pressure support. The remaining condensate and LPG will

giant South Pars field, as either partner or operator.

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.

Petropars is owned 60 per cent by the National Iranian

be sold.
Petropars is to act as operator of the development project for the land-based gas treatment facilities.

Oil Company (NIOC) and 40 per cent by IDRO, an organisation under the Iranian Ministry of Industry.

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 relations with Iran.
The deal came into force in November, when Statoil
took over the operatorship. Work will extend over the four
years, with the groups capital commitment during this
period totalling USD 300 million.
The groups 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

Operatorships transferred

Many small finds

Eight new oil and gas discoveries were made on the

Operator responsibility for Snorre, Visund, Tordis and

ees, including about 250 employed offshore on Snorre A

Norwegian continental shelf in 2002, with Statoil as opera-

Vigdis in the Tampen area of the Norwegian North Sea

and B as well as the Visund platform.

tor for six and a partner in the other two.

passed from Norsk Hydro to Statoil at midnight on 31

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 Fjran, 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 exploration acreage."

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-

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 Fjran.
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.

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46

MAGAZINE

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.

Deal done on
UK gas storage

Navion sold to
Teekay Shipping

Statoil acquired the development rights in December for an

The Navion ASA shipping company wholly owned by

underground gas storage facility to be built at Aldbrough on

Statoil was sold in December to Canadas Teekay

the east coast of England.

Shipping Corporation.

This acquisition follows an agreement to buy all of the

"Were very pleased to have entered into this trans-

shares in the Aldbrough Gas Storage Company Ltd from

action with Teekay," said Erling verland, executive vice

Intergen, a company owned jointly by Shell and Bechtel.

president for Statoil's Manufacturing & Marketing busi-

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

ness area and chair of Navion.

minal interruptions, and will provide additional security of

Im confident that Navion, under its ownership, will

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

continue to deliver first class services to both Statoil and

In addition, the facility's rapid injection and withdrawal

its other customers.

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

The net sales price is approximately NOK 6 billion in

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

cash. With the transaction effective from 1 January

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

2003, closing is expected in the second quarter of 2003

lion cubic feet) of gas.

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

This will involve the construction of an eight-kilometre

remain until then.

gas pipeline connection tied into Britain's national trans-

"We achieved a fair price with Teekay a company

mission system, a power line connection to the Yorkshire

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

Electricity distribution network and a seawater leaching

al reach and financial strength," adds Mr verland.

system.

Teekay has expressed a commitment to further

Plans call for everything to be ready for operations to

develop the competent Navion organisation in Stavanger

start in 2007.

which will be the main operating office for Teekay in

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

Norway.

deliveries from the Norwegian continental shelf," says vice

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

president and project director Mike Kelly at Statoil UK.

global shipping partner of Statoil," says Bjrn Mller,

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

president and chief executive officer of Teekay.

value of our gas portfolio."

"Theres a great fit between Statoil and Teekay, both

Gas is currently supplied to the UK via the Vesterled

in terms of operating philosophy and growth ambitions.

trunkline from the Heimdal platform in the North Sea and

Navion complements our existing business and enables

the Frigg pipeline to the St Fergus terminal in Scotland.

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 substantial international size, the worldwide market leader

Snhvit recruitment starts

in offshore loading and a leading regional conventional

shipping company.

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

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

tions organisation for Statoil's Snhvit field in the Barents

Varhaug explains.

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

place by 2005.

With more than 20 years' experience in offshore loading, it has developed cutting edge technology and con-

This will provide the greatest continuity in the workforce

and thereby help to achieve good operating results.

cepts within this area.

Navion operates a fleet of 26 shuttle tankers, two

Operating the gas liquefaction plant and other facilities

Both young newly-qualified personnel and experienced

storage vessels, 12 crude tankers, nine product carriers

at Melkya outside Hammerfest in northern Norway will

technicians are required. Statoil is also hoping that a large

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

require about 175 permanent employees.

number of well-qualified people will apply for the engineer

100 people.

Of these, 120 will be chemical, process and automation

technicians, electricians and industrial mechanics. A further
25 people are required for offshore-related operations.

Teekay Shipping Corporation is a leading provider of

jobs.
The Snhvit project embraces Europe's first full-scale

international crude and petroleum product transportation

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

services through the world's largest fleet of medium-

The final 30 jobs involve key administrative staff, disci-

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

pline leaders and other experienced operations personnel,

ment without offshore surface installations. Production is

reports Snhvit personnel manager Grete Varhaug.

due to start in 2006.

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

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

the world.

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

The company has earned a reputation for safety and

der will be hired in 2004.

excellence in providing transport services to oil compa-

"Operations personnel will follow the subsea field devel-

nies worldwide.

opment and construction of the Melkya 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-

STATOIL

47

MAGAZINE

GETTING
SWEETER
The 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.
ulphur has long been unwanted in oil
products because it causes environmental and health problems, and
thereby creates a negative image for
marketing.
Over the past 25 years, governments, environmental organisations, consumer groups and the oil
industry have ensured that petrol contains less and
less of this pollutant.
The current target is to make petrol sulphurfree, defined as containing less than 10 parts per
million (ppm) of the substance.
This means that a fuel tank holding 70 litres of
petrol would contain 0.5 grams of sulphur. No specific plans exist for complete elimination, which
would be virtually impossible.
Statoil is now in the process of completing an
investment programme at Mongstad which allows
this facility to produce nothing but sulphur-free
petrol if required.
And its Kalundborg refinery in Denmark will
simultaneously be able to convert all its petrol output to this quality.
Similarly, a significant part of petrol output from
the groups part-owned Pernis refinery in
Rotterdam will be sulphur-free up to 2005, when all
production there can also be converted.

The upshot is that Statoils own facilities will be

able to meet all its Scandinavian requirements for
sulphur-free petrol by the spring.
A transition to this product will occur in line
with market demand, and when the price which can

be obtained for it justifies the improvement in quality.

Sulphur is a component of crude oil. So North
Sea crudes, which are sweet (low sulphur), have
an environmental edge over sour (high sulphur)
grades from other parts of the world.
Reducing the proportion of this substance during
the refining process has been encouraged in part
through legal prescription and tax incentives.
Companies able to produce or secure sweet
products and use this in their marketing also have a
competitive edge, while consumers have set maximum sulphur levels for some applications.
In consequence, refineries have invested billions
in desulphurisation plants. Sweet products normally cost most than sourer versions.
Tax differentials have ensured a good return for
national refiners making such investments in certain markets where the availability of a local quality is limited. Sweden provides a case in point.
In larger, open markets where the authorities
have only set maximum limits, prices usually rise
for a limited period until a balance between supply
and demand is restored.
This generally means that refiners are unable to
achieve a fully acceptable return on their desulphurisation investment.
Nevertheless, not investing is out of the question
since this might mean being unable to deliver
which could lead in turn to closure of the refinery.
Statoil currently produces 14-15 million tonnes
of refined products per year from the Mongstad,
Kalundborg and Pernis facilities.
STATOIL

49

MAGAZINE

All three have invested heavily in improving the

environmental quality of their output including a
reduction in sulphur content.
In response to the poor air quality in major
European cities, the EU launched a drive in 1988
for standard petrol specifications among its members. This was followed by common limits for vehicle fumes.
Cars sold in the various west European nations
are largely the same makes, but petrol specifications have long been and remain different from
country to country.
Variations based on climatic changes from north
to south are natural enough. But it would simpli-

LINKS

MARKET FOCUS

T E X T

leif.gustav.hollund@statoil.com

P H O T O S

Odd Inge Wors,

oyvind.hagen@statoil.com

The author heads product sales and supply in Statoils oil trading and
supply cluster. His entity handles sales by the groups European refineries and supplies its marketing operations in Norway, Sweden, Denmark
and Ireland.

SULPHUR CONTENT IN PETROL (PPM)

Norway
Sweden
Denmark
Finland
Ireland
Germany
UK
Netherlands
Switzerland
USA
300-1

150
50
150
50
150
10
50
50
50
000

No change decided before 2005

No change decided before 2005
No change decided before 2005
No change decided before 2005
No change decided before 2005
Sulphur-free
Considering sulphur-free from 2003-04
Considering sulphur-free from 2003-04
Sulphur-free from 1 January 2004
Reducing to 30-80 in 2006

Sulphur content in some important petrol markets

fy the market if common ceilings were imposed for

pollutants in petrol, such as sulphur.
On the other hand, the many specifications offer
commercial and optimisation opportunities
between markets for companies with flexible
refineries. Mongstad, for instance, produced about
60 different petrol qualities in 2002.
The composition of vehicle exhausts is determined by engine design, the catalytic converter fitted and the quality of the petrol used.
Most people are aware that sulphur emissions
are harmful to both health and the environment. But
they also reduce converter efficiency.
A controversy accordingly raged throughout the
1990s between carmakers and oil companies over
who should bear the cost of reducing pollution from
petrol-driven cars.
Either refiners had to pay through maximum
cleaning of the fuel, or the automotive industry
would be forced to fit their cars with very advanced
engines and complex converters.
New EU regulations on limiting pollutants in
exhaust fumes from petrol-driven cars, which come
into effect in 2005, greatly reduce permitted emissions of nitrogen oxides.
Combined with demands for lower fuel consumption to cut the amount of carbon dioxide
released, this requires an engine technology which
operates with excess air during combustion.
That in turn will demand converters with an
extremely low tolerance to sulphur if they are to
function satisfactorily.
So the upshot is that ensuring the best possible
air quality calls for petrol to be upgraded in addition
to improving engine and converter design.
Through a series of intermediate phases, it is
now clear that sulphur-free petrol must be available
in all EU countries from 2005.
However, member states are free to introduce
tax incentives at an earlier stage in order to stimulate the sale of sweet fuel.
The refining industry has estimated that it will
need to invest some EUR 10 billion if all petrol
from every European refinery is to be sulphur-free
as currently defined.
Germany adopted tax differentials on 1 January

2003 which mean that anyone selling petrol containing more than 10 ppm of sulphur must pay additional duty.
The latter amount is intended to be higher than the
estimated additional cost of producing or buying
sulphur-free petrol to sell at German service stations.
Other countries are also considering the introduction of similar schemes before 2005.
Statoil ranks as a large petrol producer from its
three refineries, with some 4.2 million tonnes at its
disposal 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 in
these four Nordic nations.
Partly in collaboration with other players in
Norway, Statoil has indicated that it is interested in
converting to sulphur-free petrol in the domestic
market.
Through a dialogue with the Norwegian authorities, the group has sought to achieve differentiated
taxes which could cover the additional cost along
the lines followed in Germany.
So far, the authorities have been reluctant to help
encourage a switch to sweet petrol in the domestic market.
European production capacity for petrol outstrips local demand, and prices and volumes in
Europe are largely determined by the US balance
between supply and demand.
The Americans consume more than 40 per cent
of the worlds petrol and import a proportion of
their requirements.
Statoil ships between 500 000 and one million
tonnes of petrol annually from Europe to the USA.
These supplies have so far come largely from
Mongstad, but also from purchases in Europe.
They are primarily sold via the groups US trading office in Connecticut to American oil companies.
Exports to the USA have so far provided a
favourable market for that part of Mongstads output which is relatively high in sulphur.
From the second quarter of this year, however,
STATOIL

51

MAGAZINE

all petrol from the refinery will be able to compete

in every low-sulphur and sulphur-free market
inside and outside Europe.
Germany resolved to introduce a differential tax
so early that national suppliers have had time to
prepare their refineries for such production.
Plants in the former East Germany are particularly well placed, and have partially replaced petrol
imports via Hamburg a natural delivery point for
Statoil.
On the other hand, Germany is largely supplied
from Rotterdam by pipelines and Rhine barges. The
Dutch port remains Europes biggest refining centre, selling to the domestic market, inland Europe
and other regions.
That means that players, such as Statoil, who
want to supply Germany with imported petrol face
stiff competition and limited market access.
The main environmental benefit of Statoils sulphur-free petrol must accordingly be sought in its
domestic Scandinavian markets, once these begin
to demand this product.
In the meantime, the group can exploit sales
opportunities in Germany and probably Switzerland
from 2004. And it can hope that demand for
sweet petrol will increase in the UK, the
Netherlands and other markets during the year.
TONNES CONSUMED PER YEAR, MILLIONS
Norway
Sweden
Denmark
Finland
Ireland
Germany
UK
Netherlands
Switzerland
Western Europe
USA
World total

1.6
4.0
1.9
1.8
1.4
30.0
20.0
4.2
3.8
120.0
380.0
865.0

Size of some important petrol markets

PORTO BETALT
VED
INNLEVERINGA
P. P.

ECONOMIQUE
NORGE/NOREG

Return address:
Statoil
N-4035 Stavanger, Norway

www.statoil.com/statoils_world