Category: Management of and in Equinor: Equinor and the state

The recently formed Norwegian Petroleum Consultants joint venture had already signed a contract for project management and engineering of the B structure. While fabrication of the deck and outfitting of the concrete shafts remained to be finalised, an option agreement had been reached with the Aker group.

As things stood, the major contracts thereby appeared to be in place. After the Storting had approved phase II of the development plan in June 1976, most people assumed it was just a matter of starting work. However, the NPD – which was responsible at the time for safety offshore – also wanted to say its piece. It did that in a letter sent to Statoil and operator Mobil on 11 November 1976, which altered all the plans.

Vogt committee

New safety regulations for the offshore industry had been introduced earlier that year. Where Statfjord B and the licensees were concerned, a key point in these was a more restrictive attitude to placing drilling, production and living quarters on a single integrated platform. The rules had been drawn up by the Vogt committee, originally appointed by the government as far back as 22 March 1970 with a mandate to deliver draft safety regulations. They would apply to production and storage facilities on the seabed as well as the utilisation of petroleum deposits.[REMOVE]Fotnote: Norsk Oljerevy, no 2, 1976, “Kontroll med sikkerheten fordelt på ni instanser”.

Work on the provisions made slow progress and senior foreign ministry official Jens Evensen, who chaired the committee, eventually asked to be relieved. He was replaced by director general Lars Oftedal Broch from the Ministry of Justice in November 1972, and then by Nils Vogt from the NPD in May 1974. The committee presented its recommendations to the Ministry of Industry on 12 June 1975, after which a consultation process was held with affected parties, institutions and companies.[REMOVE]Fotnote: Hanisch, T, Nerheim, G and the Norwegian Petroleum Society, 1992, Fra vantro til overmot?, Norsk Oljehistorie, vol 1, Leseselskapet, Oslo: 324.

Adopted by royal decree of 9 July 1976, the safety regulations were based on the Vogt committee’s proposals and the comments received. A presumption in the decree was that the NPD would have the main responsibility for regulating fixed offshore installations. So the directorate reviewed the safety aspects of the Statfjord B facility on the basis of the new regulations. It kept the industry ministry informed about its work, including the following comment in a letter dated 7 July 1976:

On the basis of the ongoing work with safety-related conditions, it has been found necessary to adopt a more restrictive attitude towards the concepts which are based on combined production and drilling and where the living quarters are placed on the same platform. The main intention of the Vogt committee’s recommendations runs counter to both combined activity and the placing of living quarters as mentioned. […]. The NPD would emphasise that combined drilling and production will only be accepted after individual analyses and assessments. That also applies to living quarters which it is proposed to place on a drilling/production platform. Where Statfjord B is concerned, no final choice of concept has been made and no specific safety analysis is therefore available. The NPD will therefore have to wait until the factual conditions have been presented before commenting.[REMOVE]Fotnote: Norsk Oljerevy.

In other words, the ministry had been informed about the NPD’s work and its doubts about the plans for Statfjord B. As the letter noted, the NPD could not adopt a final view until the Statoil group had chosen its concept. It was not until the Statfjord unit owners’ committee (SUOC), the highest decision-making body for the licence, approved a final concept for the B platform in August 1976 that the NPD could present its own safety analysis.

The outcome of this assessment was communicated to the Statfjord group by letter on 11 November 1976. After questioning the safety of an integrated platform, the NPD ordered the construction of a separate quarters platform tied back to the B installation. It wrote:

The NPD is currently assessing the concept for Statfjord B, based on a general assessment of the safety regulations on the field in the light of new regulations (royal decree of 9 July 1976).

According to the directorate, the following assumptions were made for Statfjord B:

• a particularly complex and extensive production plant concentrated on one platform
• a large number of high-capacity producing wells as well as water and gas injection
• permanent living quarters for 200 people, which will be used by 400 personnel during construction and possibly drilling
• possible parallel drilling and production.

The NPD observed that the total risk was obtained from the contribution of each activity and process, with those listed above specified as examples. It assessed the overall risk related to these conditions as too high.

Fewer personnel

The letter went on to state that the best way to cut the overall risk would be to reduce the number of people present on the platform at any given time. “The NPD has accordingly concluded that a separate living quarters platform tied to Statfjord B should be built.”

This assessment was not confined to the B facility. It also posed questions about Statfjord A, which was at that time far advanced in the construction process and due to be towed out to the field within six months. The letter observed:

The considerations mentioned above also apply to Statfjord A, but somewhat less strongly. On the basis of the provisions in the royal decree of 9 July 1976, the NPD would therefore request that the company conducts a new overall assessment of safety conditions in relation to the planned drilling and production programme, where special attention is devoted to the quarters issue.

The letter was signed by Gunnar Hellesen, chair of the NPD, and Fredrik Hagemann, its director general.

New concept proposed

Statfjord B had been planned as a virtual copy of the A platform, but with four concrete support shafts rather than three. The processing facilities would be equally large and complex, providing a production capacity of 300 000 barrels of oil per day (bopd). A quarters module with 200 berths would also be placed on the platform – and it was this proposal in particular that the NPD wanted to halt, on the grounds that reducing the number of people on board at any time would cut the total risk. As the letter indicated (above), it was desirable to build separate platforms for production/drilling and quarters. The NPD also emphasised that this was the conclusion of an overall safety approach, and wanted a separate safety study before detail engineering began.

Statoil and Mobil expressed astonishment at the letter, and claimed to have not heard that such assessments were being made. Arve Johnsen, then CEO of the Norwegian company, described his reaction to the NPD letter in a later memoir: “I received many different kinds of letter as CEO of Statoil. […] I forgot most of them. But I’ll remember one of them to my dying day […] It sent a shockwave through the licensees in the Statfjord group”.[REMOVE]Fotnote: Johnsen, A, 1988, Utfordringen: Statoil-år, Gyldendal, Oslo: 202.

That the licensees had not seen the possibility of this occurring may seem incomprehensible. It had long been clear that the NPD was looking at the problems associated with parallel drilling and production. The Vogt committee’s recommendations had been the subject of a consultation, and the comments made then – along with the report itself – formed the basis for the new safety regulations. Adopted in June, four months before the letter was sent, these made it clear that drilling and production should not be conducted in parallel without special consent. This should have sent signals that it could be more difficult to win acceptance for the Statfjord B plans than Statoil/Mobil assumed. As late as 12 October, NPD section manager Harald Ynnesdal had explained the directorate’s views on the matter in a speech he gave in Kristiansand:

The new platform type is particularly complex and difficult to assess from a safety perspective where these combined activities are concerned. Production fields should be planned as far as possible with separate quarters platforms. The production platforms, with the combined activities, could then be assessed as pure industrial facilities.

When assessing the Statfjord project, for example, with regard to parallel drilling and production, the problem would have been much simpler if separate quarters platforms had been provided. Where this project is concerned, the cost of such facilities would have had a small effect on profitability but would have meant a lot for overall safety and the desire for an early start to production.[REMOVE]Fotnote: Norsk Oljerevy, no 9, 1976, “Statfjord – planer og virkelighet”.

Following the letter, an extraordinary meeting of the SUOC was convened on 26 November. This decided that all activities related to the Statfjord B project should be halted. It would have to be re-evaluated and extensive concept studies carried out with every option from one to three platforms.

The Statfjord field engineering committee (SFEC) responsible for technical aspects of the development met in January 1977. A sub-committee of 35 members was appointed to study and assess various concepts for the B platform, and came up with no less than 39 solutions for review.

A new meeting took place in the SUOC on 18 March, where Statoil expressed concern over progress. The project had a tight schedule, and order books at the yards scheduled to do the construction work were empty. To speed up the process, the company proposed building a separate drilling installation linked by bridge to a combined production/quarters platform. A drilling facility on a steel jacket, for example, would be relatively simple to build and could be ready for tow-out as early as 1979. That would allow production drilling to start as soon as the platform had been installed and continue while the production/quarters unit was built. Oil and gas could thereby start to flow as soon as the latter was in position.[REMOVE]Fotnote: Norsk Oljerevy, no 5, 1977, “Industrien må fortsatt vente på ‘Statfjord B’.”

It would thereby be possible to meet the original timetable outlined in the field development plan. Mobil and Norway’s Saga Petroleum were strongly opposed to this proposal, but lacked the votes to stop it. They only had 25 per cent between them, and a proposal in the SUOC needed 70 per cent support to succeed. So the scheme was approved – against the operator’s vote.

Esso also submitted a proposal to the meeting, which retained a combined drilling, production and quarters facility but halved its production capacity from 300 000 bopd to 150 000. This installation would be simpler, since it needed only one process train compared with two, and overall safety would improve. Mobil supported this plan. It was adamantly opposed to the two-platform solution and maintained that no safety benefit would be gained. Poor seabed conditions on Statfjord played their part in the assessment. The question was whether positioning two platforms so close to each other and connecting them with a bridge carrying pipelines under high pressure would pose a safety risk.

The thought of the big capital cost of two platforms also worried the operator. On the other hand, experience from other projects in the North Sea indicated that 150 000 bopd would be sufficient. Such a solution would reduce construction costs, since the platform was simplified, and production could also begin earlier.

Threats

The SUOC met again on 28 April. Mobil presented a proposal for an integrated platform with one process train and an average capacity of 180 000 bopd. By choosing that size, it hoped to avoid the need for a separate accommodation structure. However, this was such a big change from the original concept that a completely new field development plan might be needed. The one approved by the Storting (parliament) in the summer of 1976 assumed three platforms with a combined daily capacity of 900 000 bopd. Smaller installations would either require more of these or a lower production tempo.[REMOVE]Fotnote: Ibid.

A new round in the Storting could delay the project even further. At the same time, Mobil vetoed a separate quarters platform with strong support from Esso.[REMOVE]Fotnote: Moe, J, 1980), Kostnadsanalysen norsk kontinentalsokkel: Rapport fra styringsgruppen oppnevnt ved kongelig resolusjon av 16. mars 1979: Rapporten avgitt til Olje- og energidepartementet 29. april 1980 : 2 : Utbyggingsprosjektene på norsk sokkel (vol 2), Ministry of Petroleum and Energy, Oslo. The operator could not accept a solution which met the NPD’s requirement that drilling and production should not in principle be conducted in parallel on the same platform. Clear instructions had been received from the US company’s head office in New York that any compromise which involved acceptance of the NPD’s attitude was out of the question. If it yielded to this demand, Mobil feared that similar requirements could be imposed on other continental shelves. That would have major consequences both for it and for other oil companies.

A telex from New York made it clear that it looked as if concrete platforms of Statfjord A’s size had had their day on that field, and Mobil was willing to resign as operator for the B platform if a two-platform solution was adopted. That took Statoil and the Norwegian government by surprise.[REMOVE]Fotnote: Norsk Oljerevy, no 5, 1977, op.cit.”

Statoil investigated the possibility of securing another operator, but none of the remaining partners were willing to undertake the role without a redistribution of interests. Mobil and Esso had put their prestige on the line, and finally succeeded in convincing the state company of the technical problems a two-platform solution would pose. The argument that it might influence later developments in deeper water was a key factor in changing Statoil’s view.

In parallel with the discussion on one or more platforms and the study of various concepts, new seismic data for the field cut its estimated reserves from 3.9 billion barrels of oil (527 million tonnes) to 3.2 billion (432 million). That reduced the need for two process trains on Statfjord B.

A clarification

On 5 August, the SUOC approved plans for a platform carrying a process train with a capacity of 180 000 bopd. It agreed on 29 November to apply to the NPD for permission to install such a facility. The application, accompanied by a safety study, was submitted on 1 December 1977.

The plan now called for the platform to be placed in 149 metres of water at the southern end of the field. Since seabed conditions there were poorer than on the rest of Statfjord, the base area of the concrete gravity base structure (GBS) had to be increased. While Statfjord A had 19 vertical cells, its companion would be built with 24. The topside area had to increase correspondingly, from 5 200 square metres to 7 800. This would still rest on four shafts, but only one process train would be installed. With the fourth shaft reserved for the risers, space was thereby released in the other three.

An additional safety barrier was provided by deciding that the decks and modules would be open in order to reduce the risk of an explosion and limit damage were one to nevertheless occur. Distribution of the various functions was designed to ensure that no hazardous operations were located close to or below the living quarters. The latter were also to be provided with an additional firewall. These plans were approved by the NPD on 19 December 1977. The project had thereby been delayed by a year, and large costs had been incurred through a series of concept studies and reports. Henrik Ager-Hanssen, then deputy CEO of Statoil, characterised the letter from the NPD as the most expensive in Norwegian history and claimed that each word of it had added NOK 25 million to the project budget.

Viewed from a different perspective, as former Statoil staffer Bjørn Vidar Lerøen did with hindsight, oil prices rose to historic levels in subsequent years. The letter thereby became one of Norway’s most profitable.[REMOVE]Fotnote: Lerøen, B, 2002, Drops of black gold: Statoil 1972-2002, Statoil, Stavanger: 149.

The effect of the letter was a new layout design for SFB, which became the leader for future platform decks on the Norwegian continental shelf. What the British had to do after Piper A, it was done on the Norwegian continental shelf at the end of the 1970s, – without any driving accident, but as a consequence of an “untimely” letter that the authorities lashed out at.

When their partnership began in 1991, the two companies became involved in the Democratic republic of the Congo as well as Angola and Nigeria, but withdrew from the first of these areas in the same year. A venture in Equatorial Guinea, operated from Nigeria, was also short-lived.[REMOVE]Fotnote: Ryggvik, Helge. (2009). Til siste dråpe. Oslo: Aschehoug: 238.

Through various engagements, BP was already established in all three west African states when the alliance with Statoil began. However, the military regime in Nigeria had taken over the British oil major’s operations in the country during 1979 as part of a massive nationalisation wave. During the 1990s, the Nigerian mood shifted from nationalisation to internationalisation, and a more open attitude was adopted towards foreign companies. That change in climate created an opening for BP to return to the giant of Africa, this time accompanied by Statoil.

Repressive regimes, executions and environmental disasters

Statoil was to be responsible for the alliance’s joint operations in Nigeria, making this country its baptism of fire as an international oil company. A significant proportion of the staff intended to support these activities were located in Stavanger. But a number of BP personnel were included in this Norway-based Nigeria management from the start.[REMOVE]Fotnote: Ryggvik, Helge. (2009). Til siste dråpe. Oslo: Aschehoug: 231

Operational responsibility for the west African commitment was allocated to BP and its London head office. Only a minimal share of alliance personnel were permanently stationed in Africa. While 23 people, all BP employees, worked with Angola from London, only one was based full-time in Luanda. Thirty staff handled Nigeria in Stavanger, with a single person in the African country itself.

Nigeria remained an important priority area until the mid-1990s, and activity there expanded. The alliance succeeded with its strategy and established itself as a leading player in the deepwater areas off the Nigerian coast. That position was completely overturned in 1995, when political conditions in Nigeria deteriorated dramatically.

Ever greater dissatisfaction had spread among many of the people living around the Niger delta. They received little or no share of the big revenues generated by the oil resources in their region. In addition, a massive environmental disaster began to manifest itself in the delta area.

A coup in 1993 had introduced one of the most brutal and corrupt regimes in Nigeria’s history. The repressive government banned all political activity and opponents were jailed. That in turn unleashed extensive protests across much of the country. These increased from 1995 after the military regime executed nine activists from the oil-rich delta – including author and environmental activist Ken Saro-Wiwa.

These executions helped to create pressure from international public opinion. Foreign companies faced demands to pull out of Nigeria. The worst-affected was Shell, which had been producing oil for many years from a controversial part of the Nigeria delta. But organised campaigns were also conducted against Statoil in Norway. The company responded that it did not want to become involved in political processes and chose to accept the political burden of remaining in Nigeria. It argued that the human rights position would not improve if it and BP withdrew.

These developments were not particularly concerning for the alliance to begin with. It concentrated on offshore exploration, and was not involved with oil spills and dead fish in the delta. And, in the middle of the unrest on land, the alliance could raise a mighty cheer when oil was proven with its first wildcat – which also represented the first deepwater discovery off Nigeria. But the jubilation was short-lived, since the resources proved non-commercial. At the same time, the political conditions caught up with the partners.

Statoil had the most to lose by pulling out. Nigeria was where the company intended to demonstrate that it could serve as an operator, even under difficult conditions, outside the North Sea.

It now transpired that repressive regimes, executions and environmental disasters were not the only problems facing BP and Statoil. The financial difficulties were a more difficult challenge. Nor had the alliance succeeded in securing its own operatorships. And its interests in other fields had also failed to yield sufficient oil to justify the exploration costs. The accounts were looking critical.[REMOVE]Fotnote: Ryggvik, Helge. (2009). Til siste dråpe. Oslo: Aschehoug: 233.

No big breakthrough occurred on the exploration side. On 20 April 1998, Statoil and BP signed a contract with Nigerian company Allied Energy on the sale of the alliance’s 40 per cent interest in block 210 – the Oyo oil field. It afterwards transpired that neither Statoil nor BP received the sale price. In addition came a price reduction of about 30 per cent, which many have characterised as incomprehensible.[REMOVE]Fotnote: Keilen, Erlend. (2003. 3. november). E24. Statoil fikk aldri betalt for oljefelt i Nigeria

An investigation was conducted, and its report concluded in 2004 that: the fact that the statements obtained are ambiguous, combined with the fact that no written documentation exists about the decisions which must have been taken, provides some scope for speculation. On that basis, the investigation committee would recommend to Statoil that it conducts an internal inquiry to clarify the circumstances. The following day, Statoil declared itself not guilty of corruption at a press conference in Oslo.[REMOVE]Fotnote: E24. (2010. 1. mars). NTB. Hemmelig Statoil-gransking av priskutt i Nigeria.

Although the alliance itself withdrew from Nigeria, Statoil remained on an independent basis and had interests in 2020 in Agbami – the country’s largest deepwater field.

Chevron is the operator of the field with a 67.30 percent ownership interest and Prime 127 has the remaining 12.49 percent. Equinor also operates two exploration licenses – OML 128 and 129 – with a share of 53.85 per cent in both. Six wells have been drilled in both, with two discoveries made. None of the fields are planned developed.

On Equinor’s own website, the company describes that its success in Nigeria “is underpinned by our sustainability work, ensuring we are a responsible operator and are proactive in improving opportunities for the communities where we work.”[REMOVE]Fotnote: https://www.equinor.com/where-we-are/nigeria

Sleipner West was discovered as early as 1974 with Esso as the operator and declared commercial in 1984. After a plan for development and operation (PDO) was submitted to the government in 1992, it came on stream in 1996. But something had to be done about the high CO₂ content in the field’s output in order to meet the specifications in the gas sales contract.

While natural gas primarily comprises methane (CH₄), it also contains varying amounts of undesirable substances such as hydrogen sulphide (H₂S), nitrogen and carbon dioxide (CO₂). Many fire extinguishers contain pure CO₂ because it displaces the oxygen needed to sustain combustion. This is also why a high CO₂ content is undesirable in natural gas for use with ovens and the like – it will not burn so well. As a result, gas sales contracts will often specify a maximum quantity of undesirable substances permitted on delivery in order to ensure combustion quality.

Scrubbed clean and stored

The gas in Sleipner West comes from 3 450 metres beneath the seabed and contains about nine per cent CO₂. That exceeds the ceiling specified in the Troll gas sales agreements, which is 2.5 per cent for this component. As a result, the excess CO₂ must be removed before exporting the gas. This is done in two ways – by blending the Sleipner West gas with gas from Sleipner East and other fields with low CO₂ content. To further reduce the CO₂ content in the exported Sleipner West gas, CO₂ is removed from it. This is done by adding amines – organic bases containing a nitrogen atom which bind to the CO₂ ­– on the separate Sleipner T gas treatment platform tied back to the concrete Sleipner A installation.

After being removed from the gas flow, the CO₂-rich amines are heated to separate the mix into its component parts again – a process called scrubbing. That allows the amine to be reused and leaves the CO₂ to be disposed of. This technology was not off-the-shelf, and had some problems and was costly. Countless modifications had to be made. One favorable factor for Statoil as operator was that the technology used was from the French company Total. Total was also a partner in the license, and hence did not cause much commotion when there was trouble with the technology. [REMOVE]Fotnote: Kyrre Nese in e-mail 8. august 2022.

CO₂ is re-injected

Since the latter has no commercial value, the simplest – and cheapest – way of dealing with this gas would be to release it to the air. That might have been done on Sleipner West, too, but the introduction of a Norwegian carbon tax for petroleum operations on the NCS meant it would be very expensive. So operator Statoil opted for a different approach, which involved pumping the CO₂­ back underground. Since returning the gas to the reservoir of origin would simply increase its content in future production, the geologists had to find somewhere else to put it.

A number of conditions must be in place for CO₂ to be stored in the sub-surface. The relevant formation must have sufficiently porous and permeable rocks, be saturated with saline water, be deep enough (more than 800 metres below sea level) to ensure that the CO₂ has the desired properties, have an impermeable cap rock to prevent the gas leaking out, and cover a sufficiently large area with a big enough volume.[REMOVE]Fotnote: https://bellona.org/assets/sites/3/Case_Study_on_the_Sleipner_Gas_Field_in_Norway.pdf

The Utsira formation, which overlaps the Sleipner reservoirs at a different depth, meets these criteria and represents an ideal location for disposing of CO₂. It lies about 800 metres beneath the seabed, while the main Sleipner East reservoir is roughly 1 700 metres further down.

Using a single well drilled from the concrete Sleipner A platform, an annual injection rate of about a million tonnes means some 20 million tonnes of CO₂ have been deposited in the Utsira formation since 1996.

Regular investigations of the sub-surface have been conducted using seismic surveying to ensure that no CO₂ is leaking from the structure to the seabed. These studies show that the injected gas is occupying an ever-expanding area of the formation and that no threat of leaks exists.

CO₂ injection from Sleipner West was a pioneering project on the NCS and has been a success. Since 2019, CO₂ from Utgard – which comprises no less than 16 per cent of this field’s output – has also been separated out on Sleipner T and injected into the Utsira formation.[REMOVE]Fotnote: Annual report Utgard 2019, AU-UTG-00002, Equinor.

The Snøhvit gas produced in Norway’s Barents Sea sector contains five-eight per cent CO₂. This is separated out in the same way as on Sleipner, but at the Melkøya processing plant on land rather than on an offshore platform. Separated CO₂ is piped back to the field in a compressed liquid phase and injected into the subsurface. Although injection problems have arisen, studies indicate that no gas is leaking out. A similar CCS process was pursued on the Salah gas field in Algeria, but terminated in 2011 because of capacity limitations in the geological structures.[REMOVE]Fotnote: https://uit.no/om/enhet/aktuelt/nyhet?p_document_id=552337&p_dimension_id=88137 and https://www.equinor.com/energy/carbon-capture-utilisation-and-storage 

CCS on Sleipner has been under way longer than any comparable project, and the data and experience this has yielded will be important for future schemes of this kind. In 2019, Equinor and its partners in the field released information on CO₂ injection and monitoring as a contribution to innovation for and development of storing greenhouse gases.[REMOVE]Fotnote: https://www.equinor.com/news/archive/2019-06-12-sleipner-co2-storage-data

Frugal style

The head of the American Petroleum Institute (API) – which represents the whole US oil and gas sector – visited Statoil in 1975. CEO Arve Johnsen was host to this highly influential executive, and provided a briefing on Statoil’s business. That included explaining how it was becoming an interesting oil seller. One point raised by the API president was whether Norway had ambitions to join the Organisation of the Petroleum Exporting Countries – Opec. Johnsen could affirm that it did not.

Following their meeting, the pair strolled over the road to the KNA Hotel in Stavanger for lunch. Johnsen asked his guest whether he would like something to drink with his food. The American smiled broadly, and perhaps expected a glass of wine. His surprise can be imagined when the frugal Norwegian went on: “How about a glass of milk?” Without any change of expression, the API man expressed his thanks and drank milk in good Norwegian style together with Johnsen.[REMOVE]Fotnote: Related by Håkon Lavik, former information office at Statoil, 2 July 2020.

Formal versus informal

International banks were queuing up in 1976-77 to lend Statoil money for its share of the Statfjord development. A Japanese bank delegation announced it was arriving in Stavanger on a Sunday evening and requested a meeting with Statoil’s finance team. This encounter was scheduled for Monday morning at 08.30. Information officer Håkon Lavik was assigned to fetch the visitors from the city’s best hotel – the Atlantic – at 08.00.

He met four vice presidents, very correctly dressed in pin-stripe suits and ties. They insisted on leaving at once to avoid being late. A taxi was ordered and the group arrived at about 08.15 at Statoil’s international department, which was then based at Flintgaten 2 in the Hillevåg district.

The only Norwegian present then who was due to attend the meeting was Jørn Larsen, a burly type from the Jæren farming district south of Stavanger wearing jeans and a pullover.

Tor Espedal, the chief financial officer, arrived soon afterwards. He always started his working day with a swim and still had wet hair, as well as being sweaty and open-collared (his tie was in his pocket) after cycling to the office.

Then came a very correctly dressed Eivind Brekkelund, an economist, followed by Jan Erik Langangen – a later Statoil chair – in jogging gear. His suit was in the changing room.

Svein Andersen, head of the company’s internal audit function, turned up next. He was also on a bike, wearing trainers and an anorak.

Finally came Thor Inge Willumsen, later Statoil’s CFO, in a pullover and without a tie, and munching on a carrot which marked the end of his breakfast.

Only a few minutes passed before everyone was ready for the meeting, and Statoil was loaned billions of kroner. But the Japanese visitors were undoubtedly taken a little aback at Norwegian culture of informality.

Despite their relaxed style, the Statoil team was no gang of small fry. All those mentioned later become senior vice presidents in Statoil, while Brekkelund went to Mobil and then to Shell.[REMOVE]Fotnote: Ibid.

Anti-aircraft guns on Statfjord

The Statoil management received an important visit from the Supreme Soviet one September day in 1976. After the conventional introductions by chair Finn Lied and CEO Johnsen, the latter gave a briefing on the company’s operations. That included a review of the current construction of the Statfjord A platform, with particular emphasis on building concrete gravity base structures. This was long before the computer age, and engineers commissioned detailed models of such installations to help their design work.

The model of Statfjord A stood in the corridor outside the meeting room in Lagårdsveien 78, which functioned as Statoil’s head office at the time. During the presentation, with associated slides, a discussion began with and between the visitors about whether the Soviet Union had any such structures. The delegation claimed it had, and even some that were larger.

After the meeting, the group assembled around the model. This was very detailed, and visitors noticed that water monitors were installed around and about the topsides in case of fire. But the Soviet delegates through they were anti-aircraft guns – because that was something they really knew about. From their perspective, this felt to be was essential. Fire-fighting was an unnecessary precaution. The visitors were otherwise very grateful for Statoil’s openness, which they much appreciated. It only emerged later how distinguished this visit had been.

When the next session of the Supreme Soviet opened a few weeks later, and the event was shown on the TV news, three of the delegates were seen seated in the first row on the podium. They were immediately behind Communist Party head Leonid Brezhnev, who gave the opening speech. The visitors had been really top politicians with great influence in the Soviet Union.[REMOVE]Fotnote: Ibid.

Statoil was not unfamiliar with the Dutch continental shelf. It had interests in two licences inherited from the Norwegian government after the Storting (parliament) gave its blessing for the company to exercise the state’s option for them in 1982 – with the rights and obligations that this involved.[REMOVE]Fotnote: Ministry of Petroleum and Energy, Proposition no 102 (1981-1982) to the Storting, Om utøvelse av Statoils opsjon til å delta i lisensen K/18-L/16 på nederlandsk kontinentalsokkel m.m.

The assumption was that all revenues generated within the licences were to be transferred to Norway. In addition, the Ministry of Petroleum and Energy felt it was appropriate for Statoil to establish a dedicated subsidiary if the options were exercised.

As a result, the Dutch sector of the North Sea became the first of many foreign continental shelves where Statoil made a commitment. But the international dream there proved relatively short-lived. After eight years, the company sold off everything and left the country.

Acquiring the licences

The Norwegian government secured access as early as 1970 to four licences on the Dutch continental shelf as the result of a swop deal involving Norwegian Gulf Oil Company. When the latter was allowed to transfer its rights in two blocks off Norway to Norske Conoco, one of the conditions was that Conoco’s then US parent, Continental Oil Company, would give the Norwegian state a right to at least 10 per cent in a Conoco licence in a country other than Norway.[REMOVE]Fotnote: The two blocks in the Norwegian North Sea represented two-thirds of production licences 019 (Ula and Gyda) and 020.

The result was that the state acquired 10 per cent of the Continental Netherlands Oil Company (ConNed) holdings in blocks F/7, F/9, K/18 and L/16 in the Dutch sector, which amounted to 7.5 per cent of this acreage.

These blocks were transferred in 1973 to Statoil along with other agreements on state participation which the government had secured at that point.[REMOVE]Fotnote: Proposition no 78 (1972-1973) to the Storting, Utøvelse av statens opsjon på deltakelse i utvinningstillatelse for petroleum (Frigg-feltet), og overføring til Den norske stats oljeselskap A/S av avtaler om statsdeltakelse i utvinningstillatelser m.v.

The decision to transfer all such agreements left the company with options for four Dutch blocks.

Several of the prospects were later assessed by operator Conoco as uninteresting, with F/7 and F/9 as well as half the acreage in K/18 and L/16 being relinquished to the Dutch government.[REMOVE]Fotnote: Proposition no 102, op.cit.

Oil discovered in the remaining area of K/18 in 1980 was declared commercial the following year. Under the agreement originally entered into with the Norwegian state, Statoil then had seven months to decide whether to exercise its option.

While the company was free to decide that it wanted to pull out, any decision on participating in development and operation would be taken by the Storting. When the matter came up for debate there in June 1982, there was no discussion – Statoil was to participate for the first time in oil production on another country’s continental shelf.

With a green light from the Storting, the company opted to participate in developing K/18 in accordance with the plans drawn up by Conoco.[REMOVE]Fotnote: Annual report and accounts 1982, Den norske stats oljeselskap a.s, Stavanger.

Subsidiary

In line with the Storting’s wishes, Statoil established a subsidiary and permanent office in the Netherlands. It also regarded the model of a wholly owned daughter company as the most appropriate way to organise foreign operations.

The advantage of this approach was that subsidiaries abroad could draw on parent company expertise in a flexible and straightforward manner. They were charged for such services at the hourly rates normally applied between oil companies.

Since these foreign arms were Statoil’s own limited companies, they had to comply with the laws of the country they operated in. That in turn meant they had to keep full accounts for their own activities, which had to be confirmed and approved by auditors in the subsidiary’s own country and in Statoil.

K/18, or the Kotter field, came on stream on 22 September 1984, and Statoil began earning revenues from a foreign engagement for the first time. Production from the Logger field in L/16 began a year later.[REMOVE]Fotnote: Status, Statoil house journal, no 8, 1985, “Logger-feltet i produksjon”.

Looking for more

Statoil was keen to participate when new blocks were put on offer in the Dutch sector during 1984. Its board raised the issue of such involvement with the general meeting (the minister of petroleum and energy). Statoil’s preference was to be an operator.

The Dutch authorities had an express desire to develop collaboration with Norway in the oil sector in order to reduce the influence of the big multinational companies.[REMOVE]Fotnote: Status, Statoil house journal, no 16, 1984, “Operatøroppgave i Nederland?”.

Statoil applied for the operatorship of three blocks in this fifth licensing round, and reinforced staffing at the Dutch subsidiary by eight people.

The company secured 60 per cent of block F/14a. According to the Dutch government, it had the best geological interpretation and a good work programme. An award to Statoil would also fit well in a broader energy-policy context. To judge from the number of applications, the blocks sought by the company were the best in the round.

Drilled by American jack-up Zapata Scotian, the initial wildcat on F/14a was Statoil’s first well as operator outside Norwegian waters and was spudded on 8 August 1986.

Oil was encountered in the licence,[REMOVE]Fotnote: Status, Statoil house journal, no 10, 1986, “Oljefunn på nederlandsk sokkel”. but not much. Small oil deposits were also discovered in the neighbouring block, along with gas assumed to be commercial. F/14a proved a disappointment, since the oil found was much less than the company had hoped for.

Statoil nevertheless did not give up, and applied for further licences – securing three operatorships in 1987 and two more in 1989. That meant the company had six operatorships plus participation in the producing Kotter and Logger fields.[REMOVE]Fotnote: Status, Statoil house journal, no 19, 1989.

An end and a new beginning

While Statoil was celebrating its 20th anniversary in 1992, its Dutch involvement terminated. The company sold its remaining exploration licences and the subsidiary there.

It wanted to concentrate its international involvement by making a full commitment to the collaboration project with BP in the former Soviet Union, south-east Asia and west Africa.[REMOVE]Fotnote: Stavanger Aftenblad, 8 April 1993 “Statoil selger i Nederland”.

Singapore was and is an important hub for east-west trade. This modern city state houses more people than Norway in an area of about 800 square kilometres. A cultural melting pot, the former British colony with a predominantly Asian population handles contacts between two continents both linguistically and culturally.

15.00 Singapore/09.00/Stavanger/03.00 New York

In the 1990s, Singapore ranked as the world’s third largest oil refining centre and had a growing petrochemical industry. Tankers and dry cargo ships lay in the roads under an equatorial sun and daily afternoon downpours while waiting to berth for loading and unloading.

Statoil’s first office there opened with five employees and lay in the busy Orchard Road shopping street. During a visit in 1992, CEO Harald Norvik stressed the importance of close contacts with the market. “We have 1.1 million barrels for sale every day. This big volume makes us one of the most central players in the market for North Sea oil.”[REMOVE]Fotnote: Statoil Magazine (print edition), no 1, vol 14, 1992.

He noted that Statoil would be able to benefit in the future from the “sunrise effect” when selling oil – the world’s most traded commodity. Thanks to the time differences between the company’s sales offices, it could market crude oil, gas and refined products 24 hours a day. When the Singapore office closed for the night, it was morning in Stavanger and London. Afternoon in Europe heralded the start of a new day in New York.

Since access to information on oil trades was just as fast during the 1990s in Stavanger and Singapore, no technical barriers prevented all trading taking place in Norway. But the oil industry was also people-based – cultivating contacts was important for winning contracts. That called for a physical presence in Singapore and other leading oil-trade centres.[REMOVE]Fotnote: Ibid.

Traders – an important role

In 2012, two decades after it opened, staffing at the Singapore office had risen to 45 people. That included 10 traders, out of the 100 overall in the Statoil organisation who accounted for a dizzying NOK 1.1 billion in daily sales.

Oil was not the only commodity traded in Singapore. Asia had become perhaps the most important Statoil market for liquefied petroleum gases (LPG). Comprising propane and butane, this product was primarily purchased in the Middle East and sold on. A cargo of LPG could change both its route and its owner six-seven times before reaching port – hopefully ending with the buyer willing to pay the highest price.

Each trader usually specialised in a single product. They had to pay close attention, be familiar with market conditions and know what drove prices.

Their first job when arriving at work each morning was to secure an overview of the market. Product prices depended on the outlook for global oil demand. Had there been unrest or incidents during the night which affected crude prices? How large was the total supply of oil from the North Sea, the Middle East and – more recently – the USA? If oil stocks, particularly in America, were filling up, it indicated that available supplies were too large and that the price would fall.[REMOVE]Fotnote: Henrik Sommerfelt, head of Norway, CMC Markets, 19 April 2020. Was production at Statoil’s refineries running normally? Which products were available for the traders to sell, and in what quantities? When were the products to be delivered? Since all these factors could change rapidly, traders had to be able to interpret the information and take quick decisions, with a fairly large slice of personal responsibility.

Most contracts in Singapore were fixed at around 17.00-18.00. The working day for a trader there was not over until 19.00, which allowed for an overlap with their counterparts at Statoil’s Forus office in Stavanger, who would have just completed their lunch break.[REMOVE]Fotnote: Stavanger Aftenblad, 8 January 2012, “The energy market never closes”.

Wider activities

Equinor’s sales and marketing office in Singapore was located at Marina View in 2021, overlooking the busy pleasure-boat traffic. It was no longer confined to sales, but also had responsibility for refining operations elsewhere in Asia. The office has increased in importance, since other parts of Equinor’s business development in the Asian region are run from there.

Statoil had a relatively long history in South America. It had been producing heavy crude in Colombia’s neighbour, Venezuela, since the late 1990s, and was also heavily involved in both oil and gas production off Brazil.

Legal and illegal

Oil has been Colombia’s most important legal export commodity, primarily to the USA. Traditionally, its economy has been based on agriculture – including the export of coffee and bananas. A more questionable side of the country is that it ranks as a major producer and exporter of cocaine.[REMOVE]Fotnote: https://www.fn.no/Land/colombia. That activity has contributed to 50 years of armed conflict between guerrilla groups, the army, right-wing paramilitaries and drug cartels. Negotiations began in 2010 between president Juan Manuel Santos and the Farc guerrillas, and a peace agreement was signed in September 2016.

Santos, who held the presidency from 2010 to 2018, was awarded the Nobel Peace Prize in 2016 for his work on this peace deal, where he had been assisted by Norwegian diplomats.[REMOVE]Fotnote: https://en.wikipedia.org/wiki/Juan_Manuel_Santos Unfortunately, the agreement failed to win ratification in a referendum.

Foreign investment increased after the Colombian government took steps during the 2000s to improve security in the towns. Free trade agreements were signed with the USA, the EU and China.[REMOVE]Fotnote: https://www.fn.no/Land/colombia.

Statoil explores offshore

Ecopetrol, owned 80 per cent by the Colombian state with private investors holding the rest, was the dominant oil company in the country. All its directors were appointed by the president, and he decided in reality which companies should be awarded production licences.

So it is likely that Santos himself was involved in allowing Statoil to farm into licences in the country.

Like a number of the exploration targets where the company was involved internationally, the deepwater areas off Colombia were almost virgin territory. “We are gaining access to a vast underexplored frontier area through early access at scale, which is in line with Statoil’s exploration strategy,” Nick Maden, senior vice president for exploration activities in the western hemisphere, observed in a press release when a first licence was secured in Colombia.[REMOVE]Fotnote:  E-24, 24 July 2014, “Duket for Statoil-debut i Colombia”.

Awarded in July 2014, this holding was in deepwater licence COL4. Spain’s Repsol was the operator, while Statoil had a 33.33 per cent interest.

Two months later, the company could announce that it had farmed into two more licences by buying holdings from Repsol. This involved 10 per cent of the Tayrona licence operated by Brazil’s Petrobras and 20 per cent in Guajira Offshore 1, where Repsol was the operator (see map).

All these licences committed the companies to acquire seismic data, but they were not obliged to drill. All the transactions otherwise had to be approved by the National Hydrocarbons Agency of Colombia (ANH).[REMOVE]Fotnote: E-24, 24 July 2014, “Statoil sikrer nytt leteareal i Colombia”.

Statoil established a separate subsidiary in the Netherlands to run the involvement in Colombia. This paid tax to the country and invested a good deal in exploration during 2016-17.

Pulling back

In 2020, the exploration work which Statoil/Equinor had committed to was nearing completion. The subsidiary responsible for this activity no longer had any personnel. No results worth continuing with had been achieved. The subsidiary’s equity was negative at USD 121 million, which represented the funds it had devoted to exploration.[REMOVE]Fotnote: Annual report, 2020, Equinor: 308. It was time to withdraw. This fitted with Equinor’s revised exploration strategy, which replaced a broad commitment and working in many countries simultaneously with concentrating on fewer core areas. Colombia no longer featured on that list in South and Central America. Instead, the company chose to concentrate on Brazil and withdrew from Venezuela, Uruguay, Nicaragua and to some extent Argentina as well as Colombia. From being involved in about 30 countries around the world in 2014, Equinor remained active in roughly 15 by 2021.

The Asian economy expanded in 1995 by 7.5 per cent – compared with a growth rate of three per cent for the world as a whole.[REMOVE]Fotnote: Stavanger Aftenblad, ”Milliard-satsing for Statoil i Asia”, 7 April 1995, National Library of Norway. Since Asia was – and is – the world’s most populous region,[REMOVE]Fotnote: Solerød, Hans and Tønnessen, Marianne, ”Verdens befolkning”, Store norske leksikon, https://snl.no/verdens_befolkning, accessed 16 March 2022. that naturally also attracted attention elsewhere.

Norway’s Labour government under Gro Harlem Brundtland had cast its eye on Asia’s rapidly growing economy, and pursued an “Asia commitment” in 1995-96. That included members of the government, with representatives of the Norwegian business community, travelling to – almost touring – selected countries in the region.

Petroleum, environmental technology, hydropower, ship’s gear and communication systems were identified as particular areas where Norway could acquire a slice of the growing cake.[REMOVE]Fotnote: Bergens Tidende, ”Statoil investerer i Malaysia”, 7 April 1995, National Library of Norway. Statoil was one of the companies keen to secure a helping.

Melaka refinery

A rapidly growing economy plus a big population equals a region which needs oil and oil products. Statoil characterised Asia in 1995 as the world’s most expansive oil market.[REMOVE]Fotnote: Aftenposten, ”Statoil inn i Asia-raffineri”, 7 February 1995, National Library of Norway. The company was already then negotiating to acquire 15 per cent of the Melaka facility, and this purchase was approved by its board on 31 March 1995.[REMOVE]Fotnote: Board minutes, Statoil, 31 March 1995. Its partners were American company Conoco and Malaysia’s Petronas. An expansion phase under way at the refinery was intended to increase its daily capacity to 100 000 barrels oil when completed in 1998.[REMOVE]Fotnote: Aftenposten, “Olje fra Nordsjøen gir Statoil gevinst i Asia”, 4 November 1996, National Library of Norway.

Statoil could use its share of the refinery to produce oil products for the Asian market. In the longer term, it also wanted to refine feedstock from its own sources in Asia – such as the Lufeng field off China.[REMOVE]Fotnote: Ibid.

The company emphasised that this commitment would be commercially profitable and was not being subsidised by other parts of the business. In particular, it pointed out that a shortage of refining capacity in Asia meant owning a facility made better financial sense than leasing one expensively.[REMOVE]Fotnote: Ibid. Statoil was pleased to have the chance to cooperate with its partners in Melaka, whom it regarded as experienced in the refinery business.[REMOVE]Fotnote: Stavanger Aftenblad, ”Milliard-satsing for Statoil i Asia”, 7 April 1995, National Library of Norway.

Profits from refining had been rising in Asia since the 1980s, and were now higher than in Europe. [REMOVE]Fotnote: Annual report, 1995, Statoil: 27.

But the question is how sensible it actually was for the comany’s reputation to become involved in Melaka.

Compensation claims

Expanding this facility had led to conflicts with the local population. Of the 300 families displaced to make way for heavy industry, 67 were still not satisfied in 1997 with the compensation awarded and had taken legal action. So had 300 fishermen who could no longer work in the waters off the refinery because of new quays and an expanded security zone.

Worst of all, perhaps, the expansion had led to the demolition of two mosques and left two cemeteries inside the refinery site – making it difficult for relatives to visit the graves.[REMOVE]Fotnote: Dagbladet, ”Opprør mot Statoil-satsing”, 30 January 1997, National Library of Norway.

The criticism was covered in several newspaper articles and also expressed by Norwegian environmental organisation The Future in Our Hands (FIVH). Statoil denied that it had any involvement in the issue because permission for the expansion was given before it acquired its stake. The company’s response was therefore that it would raise the matter with Petronas and Conoco and, after doing so, that it had received satisfactory answers.[REMOVE]Fotnote: Leer-Salvesen, Tarjei, 1998, I gode hender? FIVH, Oslo: 30.

Furthermore, the Melaka refinery was criticised for refusing to allow its workers to choose their own union and making them join the Petronas “company” union. That was contrary to the principle of free association, according to the NorWatch monitoring project.[REMOVE]Fotnote: NorWatch was launched by the FIVH in 1995 to monitor Norwegian commercial projects abroad, with a particular concentration on the environment and human rights. It was wound up in October 2010, but the subject is still on the FIVH agenda. Statoil should either come clean and admit that it violated human rights or pull out of countries which did so, Morten Rønning at NorWatch told leading Oslo daily Aftenposten in February 2000. He maintained that this was a particular problem because the company was so concerned with such rights at home.[REMOVE]Fotnote: Aftenposten, “Anklager Statoil for dobbeltmoral”, 29 February 2000, National Library of Norway.

Despite the criticism, Statoil denied – in response to a direct question – that this was the reason why it sold its 15 per cent share in 2001 to Petronas and Conoco.[REMOVE]Fotnote: Aftenposten, “Statoil ut av problemraffineri”, 28 February 2001, National Library of Norway. Part of the reason for the sell-out was that the company’s plans in Malaysia and Asia had not developed as intended.

Unfulfilled ambitions

When Statoil bought into the Asian market, it did not regard refining as its only area of commitment and thought of Malaysia as the first step on the road.[REMOVE]Fotnote: Kuala Lumpur meeting, 11 August 1997, “Building a retail business in Malaysia”: 1.

Just as Norway and the rest of Scandinavia had been the entry point to the European service station market, the company believed such outlets in Malaysia would be followed by others in Vietnam, China and perhaps other Asian countries. The goal was for its brand to become known throughout Asia.[REMOVE]Fotnote: Ibid: 1.

Apart from Germany, where profits were too low, Statoil was building ever more service stations in Europe. The specialists who had been based in Germany were relocated to Malaysia, but this country failed to become the entry point to the Asian market.[REMOVE]Fotnote: Ibid: 3.

The explanation may be that it was difficult for a foreign company to open service stations in a country where the necessary licences were basically only available to Malaysians.[REMOVE]Fotnote: Ibid: 4. Or a decline in the Asian market could have been responsible.

Economic downturn

A research report in 1999 found that the Norwegian government’s Asia commitment had failed to provide the desired results, primarily because of an economic downturn in the region.[REMOVE]Fotnote: Aftenposten, “Mislykket Asia-satsing”, 22 April 1999, National Library of Norway.

In the mid-1990s, Asian oil demand was expected to be up by a million barrels per day to 1998. The reality in March of that year was a fall of 500 000 daily barrels and oil stores filling up.[REMOVE]Fotnote: Statoil magazine, no 1, vol 21, 1999. Statoil, Stavanger, National Library of Norway: 19.

The underlying downturn was dubbed the Asian crisis, because it derived from a burst property bubble and speculative borrowing in Bangkok.

This decline in demand had knock-on effects for global oil prices. These dropped by almost 50 per cent from the 1997 peak as a consequence of over-production.[REMOVE]Fotnote: Ibid.

Falling prices also affected the refinery sector. Despite an upturn in April 2000, the short time that Statoil had been a co-owner of the Melaka facility was primarily characterised by decline.[REMOVE]Fotnote: Dagens Næringsliv, ”Raffinert bonanza”, 11 April 2000; Bergens Tidende, ”Kan takke oljeprisen”, 22 February 2000, both National Library of Norway. But financial considerations were not the only reason for selling out.

Slimming down

Aftenposten reported in October 2000 that Statoil was already trying to dispose of its part of the Melaka refinery. This was allegedly part of a plan by CEO Olav Fjell to slim down the company ahead of a stock exchange listing.[REMOVE]Fotnote: Aftenposten, “Olav Fjell rydder videre”, 31 October 2000, National Library of Norway.

When the sale had been finalised, preparing for a listing and a desire to streamline the marketing and refining business were indeed cited as reasons.

Although Statoil had many other activities in Asia, such as oil production and crude oil sales, it was made clear that refining in this region would no longer be a core area.[REMOVE]Fotnote: Aftenposten, ”Statoil ut av problemraffineri”, 28 February 2001, National Library of Norway.

Statoil would sooner use the resources elsewhere.

While one with Esso involved learning about exploration, the other covered lessons from Mobil in developing the big Statfjord field in the North Sea.[REMOVE]Fotnote: The section on collaboration with Esso is based largely on Hanisch, T and Nerheim, G, 1992, Fra vantro til overmot?, vol 1, Norsk petroleumshistorie, Norwegian Petroleum Society, Leseselskapet, Oslo: 370-372. The section on collaboration with Esso is based largely on Moland, Elisabeth Ugland, 2011, Fra lærling til mester: Kunnskap og kompetansebygging i Statoil årene 1972–1986, master’s thesis, University of Agder, Kristiansand, accessed at https://uia.brage.unit.no/uia-xmlui/bitstream/handle/11250/139504/HI-500%202011%20Vsr%20Masteroppgave%20Elisabeth%20Ugland%20Moland.pdf?sequence=1&isAllowed=y.

Assistance with exploration and production

During the discussions in the Storting (parliament) on the award of key and boundary blocks in the Norwegian North Sea, doubts were raised about whether Statoil had the capabilities required to conduct drilling on its own account. So when Esso offered the company a technical assistance pact as part of its application for third-round licences, this was greeted with great interest. Such an agreement would allow Statoil to acquire the necessary expertise.

Providing the companies were awarded licences, the deal was that Statoil would be able to place personnel in Esso’s operational organisation to gain experience. The US partner would initially have day-to-day responsibility for Statoil’s trainees and provide them with further education. As these personnel became qualified, Statoil would take over operational responsibility.

In addition to training in exploration drilling, Esso offered assistance with operating the Ross Rig drilling unit which Statoil had recently chartered.

When the Ministry of Industry awarded new exploration and production licences in November 1974, Statoil was appointed operator of production licence 038 – covering blocks 15/11, 15/12 and 6/3 – with Esso as technical operator. The training could begin.

Statoil’s first well, 15/12-1, was drilled in what later became known as the Sleipner area during July 1975. Esso was officially the technical assistant, but undoubtedly did the job in reality. The Statoil personnel were apprentices.[REMOVE]Fotnote: Equinor.no, 4 July 2000. Accessed at https://www.equinor.com/no/news/archive/2000/07/04/DrillingFor25years.html. The well was dry, but the Norwegians secured the experience they needed to stand on their own feet and establish a technologically competent organisation.

The following year, Statoil took its qualifying test by drilling a first well on its own account. It was again drilled from Ross Rig, this time with success, in block 1/9 close to Ekofisk. The structure was named Tommeliten Alpha.

One goal had been reached. The company had the in-house expertise to serve as an exploration operator.

Collaboration over Statfjord

While Statoil was learning how to drill and operate its own exploration rig, another department of the company began a training programme in field development. This was based on a collaboration agreement with Mobil for production licence 037, which embraced the Norwegian share of the Statfjord discovery. Developing this field was to be crucial in building up sufficient expertise at Statoil for it to become a fully qualified operator on a producing field.

The licence terms specified that Statoil could take over the Statfjord operatorship after 10 years. It then had to become familiar with the field. Mobil undertook to transfer the necessary expertise, with Statoil involved in as many as possible of the processes and decisions relating to Statfjord.

As a result, the young company followed at close hand and participated actively in the development of one of the world’s largest offshore oil fields.

Statoil started building up a shadow organisation which was intended ultimately to take over completely. This expanded rapidly, from a couple of hundred staff to almost a thousand.

The company had “the right to have a reasonable number of its employees work with the operator to achieve appropriate training of Statoil’s personnel at different levels”.[REMOVE]Fotnote: Hanisch, T and Nerheim, G, op.cit: 370.

Initially, Mobil contributed the most important share of the labour force and the technology. But it was under way with training up Statoil employees from as early as 1973. A number of the latter were sent around the world to the US company’s various training facilities. The Dallas research centre was frequently used. During seismic surveys on Statfjord, Statoil was represented by a person who observed and worked with Mobil’s exploration group in London.

While many went abroad to train, several learning opportunities became available at home. Engineers from Statoil were seconded for long periods to Mobil’s internal organisation in Stavanger during the winter of 1974-75. Statoil requested that these personnel be given challenging assignments, and they were expected to have opportunities for to participate actively in all areas of the work.

To lead the actual development, Mobil established a separate project task force for each platform. This was where the largest number of Statoil personnel were seconded. While the task forces reported directly to Mobil, their members could be required by Statoil to provide the information it wanted. That meant the company could take care of all its interests – without being the operator.

Statoil established a separate department in 1975 to represent it in all matters relating to Statfjord. Led by Olav K Christiansen, this team worked closely with the company’s other units.

The collaboration with Mobil over developing Statfjord was crucial for Statoil’s build-up of expertise and for fitting it to take on larger assignments – such as the Gullfaks operatorship.