Tag: Arve Johnsen

As a leader, Johnsen was guided by his own convictions – which he managed to impose to a great extent. He was feared as an opponent – not least by conservative politicians who wanted to set limits to his influence.

Born in 1934 at Borre in Vestfold south-west of Oslo, he grew up in Hamar north of the capital where his father was the stationmaster. Johnsen attended Hamar Cathedral School, graduating in 1953, then commercial college, before taking an MSc in business economics at the Norwegian School of Economics in Bergen in 1957. He did his military service at the army college for non-commissioned officers. This taught him a lot about strategic thinking, which became important for his leadership style and found expression in his oft-repeated mantra of “capturing the strategic heights”. In 1958, Johnsen went to the USA and took an MSc in economics at the University of Kansas. He also studied in his spare time and obtained a law degree from the University of Oslo in 1960.[REMOVE]Fotnote: Norsk biografisk leksikon, https://nbl.snl.no/Arve_Johnsen.

His first job was with the Export Council of Norway in 1960-61, before serving for a decade as secretary and sales manager at Norsk Hydro – with a year out as assistant judge at Nes district court in 1964. It was during this period that he heard about Norway’s dawning oil industry and the opportunities which this offered.

Social democrat

Johnsen was socially involved from a young age, joined the Oslo Labour Society in 1962 and became chair of the Labour Party’s industry policy committee in the late 1960s. A memorandum he wrote during the summer of 1970 shaped the party’s oil and energy policy for the next few years. In it, he highlighted the need for a state oil company.

Becoming state secretary (junior minister) for industry minister Finn Lied when Labour returned to government in 1971 under Trygve Bratteli, Johnsen help to formulate a forward-looking petroleum policy. This was when the “10 oil commandments”, which have since governed Norway’s political approach to this industry, were promulgated.

Statoil’s first CEO

When Det norske stats oljeselskap (later Statoil) was established in 1972, Johnsen was offered the post of CEO by chair Jens Christian Hauge and accepted. “This will be your life’s work,” Hauge told him. “No, I’ll take it on for five years and see what happens,” he responded – but has later admitted that Hauge had been more prescient than he imagined.[REMOVE]Fotnote: Arve Johnsen, Mitt liv documentary series, season 2, Norwegian Broadcasting Corporation (NRK).

Johnsen appreciated that it would take many years before the company began to earn money, and imposed a arugal style. A cigar box from secretary Marit Falck served to hold the petty cash.

Statoil began life with an equity of NOK 5 million. It accumulated a loss of almost NOK 1 billion before starting to show a profit in 1980. Johnsen frequently cited proverbs such as “you have to sow before you can reap” and “after seven lean years come seven years of plenty”. He was determined that Statoil should cover the whole petroleum value chain, from exploration through production, transport, refining and product development to sales. The outcome was a group with many subsidiaries.

Its organisation grew rapidly and the workforce had a low average age in the early years. Johnsen was concerned to welcome all new recruits personally on the company’s introductory course.

Statoil was privileged compared with other companies operating on the Norwegian continental shelf (NCS), receiving a 50 per cent interest in all blocks awarded from 1972 until the European Economic Area (EEA) agreement came into force in 1994.

Gullfaks was the first field where Statoil was operator. Its development, with assistance from Mobil, Esso and US contractor Bechtel, marked the company’s baptism of fire and was a source of great pride for Johnsen.[REMOVE]Fotnote: Ibid.

Another high point for him came when Statoil succeeded in bringing gas ashore in Norway across the deepwater Norwegian Trench. And taking over the Statfjord operatorship from Mobil in 1987 was another important milestone.[REMOVE]Fotnote: Teknisk Ukeblad, “Tidligere Statoil-sjef Arve Johnsen: En feilvurdering å fjerne Statoil-navnet”, 19 September 2008.

During the 1980s, Statoil became a leading player in Norway’s petroleum industry. It was the largest of the three domestic oil companies, ahead of Norsk Hydro and Saga Petroleum. Under Johnsen’s leadership, the company held its own in competition with the international oil majors.

Externally, the CEO was more controversial. He could be brutal when meeting opponents if he felt they were ignorant, expressed themselves inaccurately or made incorrect claims.[REMOVE]Fotnote: Håkon Lavik, Equinor 50 år Facebook group, 18 August 2019. He was close to the Labour Party and had good contacts with its politicians, but nevertheless believed Statoil should be independent of the government. Not everyone found this consistent.

Combined with his strong – and in some politicians’ eyes arrogant – management style, that aroused irritation among certain members of the Storting (parliament). They felt Statoil had eventually become too dominant in Norway’s oil sector.[REMOVE]Fotnote: Norsk biografisk leksikon, https://nbl.snl.no/Arve_Johnsen. That led the Storting to decide in the mid-1980s that part of the revenue flowing through the company should be diverted to the state’s direct financial interest (SDFI).

Departure and afterwards

A cost overrun of more than NOK 4 billion for an expansion of Statoil’s Mongstad oil refinery was sharply criticised by the Auditor General and unleashed massive condemnation of the company’s management. Vidkunn Hveding, the Conservative who chaired Statoil’s board, opted to resign. That meant Johnsen, who was responsible for the  decision base provided to the board, had to step down in January 1988.[REMOVE]Fotnote: https://statfjord.industriminne.no/en/2019/12/03/cost-overruns-and-change-of-management/

He has subsequently written several books about his time with Statoil: Utfordringen (1988), Gjennombrudd og vekst (1990) and Norges evige rikdom (2008).

Since 1988, he has worked as a consultant – including a petroleum adviser to the UN in 1991-96. Since 1991, he has also run his own law practice in Oslo and held several directorships.[REMOVE]Fotnote: Norsk Biografisk leksikon, https://nbl.snl.no/Arve_Johnsen.

Although Johnsen in his time supported a strong, wholly state-owned oil company, he has later said that Statoil’s partial privatisation and stock market listing were important and necessary.

He was not equally positive to the merger with Hydro’s oil and energy division, and was convinced that the two companies would had done better to maintain their independence or ally with foreign partners. Without competition between them, opportunities for technological development were reduced.[REMOVE]Fotnote: Teknisk Ukeblad, “Tidligere Statoil-sjef Arve Johnsen: En feilvurdering å fjerne Statoil-navnet”, 19 September 2008.

Johnson was also very critical of changing Statoil’s name to StatoilHydro and then to Equinor. That helped to damage the Statoil brand, he maintained.

In his view, the intention underlying the Equinor name –reflecting a more environment-friendly future – obscured the fact that the group remained primarily state-owned and almost wholly involved with oil and gas.[REMOVE]Fotnote: https://www.aftenbladet.no/aenergi/i/Kve0o5/statoils-foerste-sjef-til-kamp-mot-equinor-navnet, 19 March 2018.

Photo: Knut Vindfallet

Arve Johnsen at the office. Photo: Knut Vindfallet

Photo: Knut Vindfallet

Photo: Knut Vindfallet

Photo: Knut Vindfallet

CEO Arve Johnsen at Statoils head office in Stavanger. Photo: Knut Vindfallet

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.