Notes: Over 35 years experience in oil and gas production on NCS. Developed Norway as one of the world’s leading petroleum regions. Still a leading operator on NCS but now with operations in 34 countries worldwide Also add that we’re one of the world’s 50 largest listed companies. Boilerplate: “ Statoil is an international energy company with operations in 34 countries. Building on more than 35 years of experience from oil and gas production on the Norwegian continental shelf, Statoil is committed to accommodating the world's energy needs in a responsible manner, applying technology and creating innovative business solutions. Statoil is headquartered in Norway with 20,000 employees worldwide, and is listed on the New York and Oslo Stock Exchange.” We’ve come a long way since we first started operating on the Norwegian continental shelf in 1972. And our journey continues. Now and in the years ahead, Statoil is transforming itself to become a truly global energy company, competing internationally.
Exploration & production Norway (EPN): We operate 39 fields and produce more than 3 million barrels per day. Strong presence in all regions. Technology leadership.10,000 employees in Norway, 34 Installations, 18 Mobile rigs. International exploration & production ( INT): Over the past years we have built an impressive international portfolio. Angola, Azerbaijan and Algeria are critical to our value creation, and people are working hard to maintain this, and create further success. Our success in these countries creates the foundation for delivery and further growth. Natural Gas (NG): We are the largest gas supplier in North West Europe, and a long-term and reliable supplier. Natural gas accounts for some 60% of Statoil’s total reserves. We have a strong gas position on the NCS, and NCS output will be increasingly gas prone in the time ahead. Technology and New energy ( TNE): Technology and New energy is serving the whole company with key competence and specialist teams, and will be a technological power or resource centre for realising the business opportunities of today and tomorrow. TNE will contribute to new and more effective technological solutions both within the existing core business and within new energy. Projects & Procurement (PRO): Projects is responsible for planning and executing all development projects and major modification projects. We will contribute to safe and efficient operations in connection with the projects. We are also responsible for all categories of procurement in Statoil including securing required rig capacity. Manufacturing and marketing (M&M): M&M adds value through the processing and sale of the group's and the Norwegian State's production of crude oil and natural gas liquids. M&M is responsible for the group's combined operations in the transportation of oil, processing, and the sale of crude oil and refined products. Statoil’s retail activities were 1 October 2010 separated into an independent company, Statoil Fuel & Retail ASA.
Notes: Demand for energy is increasing, while sources of energy are becoming depleted, harder to get to. Demand is accelerating - not just as our own economies expand, but as new ones develop. Environmental impact - an issue that affects us all, collectively and individually. As a business, it’s our priority and our responsibility to become more carbon efficient, and to commit to sustainable sources of energy. The economic downturn has hit our industry hard. Internally, we’ve worked to adapt to new realities, and there are signs that the “rate of decline” is diminishing. However, this does not imply that we are in for a quick recovery – uncertainty remains.
Our strategy is about three things Maximising the potential on the Norwegian continental shelf Developing international platforms for growth Gradually strengthening our position in renewable energy The Norwegian continental shelf: further improvement Considerable resource potential, but more challenging to realise it The Norwegian continental shelf will be the backbone of Statoil for many years to come We will continue to develop our expertise on the home front. Internationally: a sharper global footprint We have developed sound positions outside Norway in recent years International focus based on experience and expertise from the Norwegian continental shelf Production in Angola on a level with Gullfaks and Sleipner – Azerbaijan on a level with Kristin and Statfjord In Angola, Statoil now produce more than Statoil and Hydro did together outside Norway in 2004 Renewable energy: a firm strategy We still have great global climate challegnes – and we will not waver from our strategy Develop a business built on core expertise (offshore wind, biofuel) Main challenges: framework conditions, technology and costs. Four areas for growth: harsh environments, deep water, heavy oil, gas value chains. We are executing on the four strategic growth priorities we launched one year ago The Peregrino operatorship puts us in the lead in a major international offshore heavy oil project – utilizing our Grane experience The Shtokman opportunity strengthens our position in the Arctic – building on the Snøhvit and ormen lange projects And, the Marcellus acquisition enables us to use our market competence and ability to commercialize gas resources Shtokman and Marcellus stem from a fundamental strategic belief in the long term market outlook for gas. Gas has many beneficial properties: It’s clean with a low carbon footprint compared to oil. There is well developed infrastructure in attractive and liquid markets The liberalisation of the gas markets allow us to capture additional value from our strong market position
Notes: We practise a typical Scandinavian model of leadership - flat structure and teamwork. We combine high performance with high integrity and safe and efficient operations. We have an agreed set of values that guide us in how we do business wherever we operate. The Statoil way The way we work is as important as the goals we achieve. We believe that competitive returns for our shareholders are best achieved through a values-based performance culture, stringent ethical requirements and a code of conduct which promotes personal integrity. We set absolute requirements for health, safety and the environment. We aim to meet the demand for energy which is necessary for further economic and social development, while showing consideration for the environment and making an active effort to fight global climate change. Safe and efficient operations are our first priority. We have won great renown for our technical safety monitoring system and our safe behaviour programme. We are convinced that all accidents can be avoided, and our goal is always to achieve zero personal injuries. We emphasise continuous work for an improved health, safety and environment performance in all our activities. We focus on contributing to sustainable development via our core activities in the countries in which we operate. We are committed to openness and anti-corruption work, and to respect for human rights and employee rights. That applies both to our own activities and to those parts of the value chain over which we have significant influence. This is what we call the Statoil way.
Notes for explaining further: Our approach CSR IS NOT AN ADD-ON; IT IS SOMETHING WE DO THROUGH OUR OPERATIONS, THROUGH THE WAY WE WORK We are committed to Make choices based on how they affect our interests and the interests of the societies around us. (WE TRY TO UNDERSTAND THE NEEDS AND EXPECTATIONS OT SOCIETIES WHERE WE WORK AND THE DIFFERENT STAKEHOLDERS TO OUR OPERATIONS – AND TRY TO ADDRESS THESE IN OUR BUSINESS DECISIONS; AND MITIGATE RISKS ARISING FROM THESE SOCIAL ISSUES). Ensure transparency, anti-corruption, and respect for human rights and labour standards. (STATOI IS COMMITTED TO RESPECTING HUMAN RIGHTS AND LABOUR STANDARDS, AND WE ENSURE TRANSPARENCY AND PROMOTE ANTI-CORRUPTION IN OUR OPERATIONS AND BUSINESS RELATIONSHIPS). Promote local content from our core activities to help meet the aspirations of the societies where we operate. (WE ALSO HAVE A COMMITMENT TO PROMOTE AND INVEST IN WAYS TO INCREASE THE LOCAL CONTENT OF OUR OPERATIONS – THROUGH LOCAL EMPLOYMENT AND TRAINING, BUILDING UP STANDARDS AND CAPACITY IN LOCAL SUPPLIER INDUSTRIES, AND BY WORKING WITH PARTNERS TO IMPROVE THE LOCAL BUSINESS AND INVESTMENT CLIMATE. INCREASINGLY BOTH ACCESS TO RESOURCES/BIDDING ROUNDS AND THE SOCIAL LICENSE TO OPERATE HAVE BECOME CONDITIONAL UPON MEETING LOCAL NEEDS, EXPECTATIONS AND SOMETIMES REQUIREMENTS FOR LOCAL CONTENT CREATION).
A continuous process . Social risks : actual or potential adverse effects of planned or unintentional actions of Statoil on society; and, external risks to Statoil’s reputation or project activities Social risks and stakeholders must be identified and monitored throughout Measures to mitigate risk must be identified and implemented CSR shall be represented in independent QC process at decision milestones Implement an integrated impact assessment process that includes social dimensions to: identify and assess social impacts, both adverse and beneficial establish a system to monitor social impacts throughout the lifetime of the project and operation avoid, or where avoidance is not possible, minimize, mitigate, or compensate for adverse impacts on workers, affected communities and the environment ensure that affected communities are informed and engaged with on issues that may affect them place particular emphasis on identifying impacts on the human rights of the affected population For project development involving involuntary resettlement Statoil will follow International Finance Corporation Performance Standard 5 on “ Land Acquisition and Involuntary Resettlement”
Context: risks to Statoil Governance, legal, institutional framework Political situation, security, etc Human rights situation and enforcement Stakeholder expectation Poverty and social differences Economy (policy consistency, degree of market orientation, etc) Availability/access to infrastructure & services Labour quality and availability Law & order/crime Local community needs: education, health
Social risk review Early Phase Risk Assessment Impact assessment Stakeholder engagement CSR plans & Social investments Monitoring & reporting Ongoing dynamic risk mapping
Commitments to global standards: International Bill of Human Rights, incl. Universal Declaration Human Rights, ILO Declaration on Fundamental Principles and Rights at Work United Nations’ Global Compact 10 principles Voluntary Principles on Security and Human Rights (VPSHR). Statoil will observe strict requirements for the selection of security contractors. Statoil will submit annual reports on progress with the implementation of these principles. OECD Guidelines for Multinational Enterprises . Statoil will exercise particular caution when operating in zones of conflict or weak governance Statoil recognises and shall respect the special importance of the social, cultural, religious and spiritual values and practices of the indigenous and tribal peoples and their relationship with the land or territories, which they occupy or otherwise use. When operating or planning to operate in high human risk countries a Human Rights Risk Assessment will be conducted. Statoil expects its suppliers and partners to share the Group’s ethical values. Statoil may include references to UDHR, the UNGC10 Principles and the VPSHR in contracts with business partners.
Statoil and its suppliers shall comply with international labour standards . Where local law sets a lower standard than international standards, best efforts shall be made to meet international standards. The key international standards are contained in the ILO Declaration on Fundamental Principles and Rights at Work. The key standards are: Freedom from discrimination in employment Freedom of association and the right to collective bargaining Prohibition on forced or compulsory labour Prohibition on child labour The normal minimum age for admission to employment or work is 15 years and the minimum age for hazardous work is 18. Statoil and its suppliers should operate in full compliance with all applicable laws , rules and regulations regarding terms and conditions of employment in the sector and jurisdiction in which they operate. Such terms and conditions could include, but are not limited to, minimum wage, working hours, overtime and rest. Statoil or its suppliers shall not have any involvement in human trafficking .
We make every effort to promote our standards and principles throughout the procurement process - when evaluating and selecting suppliers, in tenders, contracts and agreements, through risk-based verification, monitoring and follow-up. In general, we expect all our partners, including suppliers, to follow our standards or an equivalent set of standards. However, we also recognise that, in many of the countries where we work, local suppliers may not currently meet these requirements. In such cases we aim to work with our suppliers to improve their skills and capacity. All suppliers based in Norway or Denmark, or supplying our operations on the Norwegian or Danish continental shelves have to be prequalified through the Achilles Joint Qualification System ( JQS=JOINT QUALIFICATION SYSTEM ). Potential suppliers are informed about our HSE requirements in the invitation to tender and the pre-qualification phase prior to contract award. The specific HSE requirements are then included in the contract and form the basis for follow-up of the supplier's performance through the contract administration phase. Prior to contract award, suppliers are screened for material integrity risks and, when relevant, subject to further Integrity Due Diligence ( IDD ). Through the IDD procedure we screen all potential business relationships, including those with suppliers, for integrity and human rights reputation risks. A business relationship with a potential supplier is only established if the resulting relationship is considered to represent a non-material integrity risk, or has previously been approved by Statoil. All our potential suppliers for contracts worth more than NOK 7 million are also required to sign a Supplier Declaration in the pre-qualification phase, whereby they commit to a set of minimum standards for ethics and anti-corruption, HSE , including core labour standards and employment conditions. Moreover, as part of this, suppliers agree to promote these principles among their own sub-suppliers. The Supplier Declaration is then made part of the contract agreement. Throughout 2009, we have strengthened the Supplier Declaration follow-up and monitoring routines and provided training for company representatives in implementation and follow-up of the Supplier Declaration.. Follow-up and Monitoring The scope of an agreement and the risks identified associated with the contract relationship determines the nature of monitoring and follow-up routines established by Statoil towards a particular supplier. This is to direct our resources into areas of highest risk and highest significance for our operations. For each contract a Company Representative is assigned with the overall responsibility for the management of the contract with the support of various disciplines e.g. contract administrator, Project Control, HSE, technical resources etc. Statoil has a strong follow up and monitoring of our first tier suppliers with whom we have a direct contract. This includes requirements that our direct suppliers themselves set comparable standards for their suppliers and sub-suppliers. Through risk evaluations, further follow up and monitoring in the supply chain are considered and Statoil focus on exerting influence where possible.
No local company excluded from bidding on and working for Statoil, provided they: meet our pre-qualification standards and, they are competitive
TBLI conference, London, 12 November 2010 Dr. Anupama Mohan Managing social risks and impacts: Statoil’s approach
Who we are <ul><li>Energy company present in 34 countries with 20,000 employees </li></ul><ul><li>Producing 1.95 million barrel of oil equivalent (boe) pr day </li></ul><ul><li>About 22 billion boe in proven resources (5.6 billion as booked reserves) </li></ul><ul><li>One of the world’s largest net sellers of crude oil </li></ul><ul><li>The world's largest operator in waters deeper than 100 metres </li></ul><ul><li>World leader in carbon capture and storage </li></ul><ul><li>The second largest exporter of gas to Europe </li></ul>
Our business areas Exploration & Production Norway International Exploration & Production Natural Gas Technology & New Energy Projects & Procurement Manufacturing & Marketing
Our business environment <ul><li>Competition for access to oil and gas resources is sharpening </li></ul><ul><li>Demand for energy increasing due to population growth and higher standards of living </li></ul><ul><li>The climate change and the need for reduced emissions </li></ul><ul><li>Oil and gas industry impacted by the economic turbulence </li></ul>
Harsh environments Deep water Heavy oil Gas value chains Building growth from a firm strategy Deliver international growth Build energy new Maximise the NCS values
What we do – and how we do it <ul><li>A values based performance culture </li></ul><ul><li>Firm commitment to health, safety and environment ( HSE) </li></ul><ul><li>Stringent ethical requirements and a code of conduct which promotes personal integrity </li></ul><ul><li>Firm commitment to corporate social responsibility </li></ul>
Corporate social responsibility policy <ul><li>Our approach </li></ul><ul><li>We contribute to sustainable development based on our core activities in the countries where we work </li></ul><ul><li>We are committed to </li></ul><ul><li>Making decisions based on the way they affect our interests and the interests of the societies in which we operate </li></ul><ul><li>Ensuring transparency, anti-corruption , and respect for human rights and labour standards </li></ul><ul><li>Contributing to local content in our projects by developing skills and opportunities in the societies in which we operate </li></ul>CSR policy FR: CSR Several WRs/GLs
Social risk and impacts sources Company Contractors Community Society Risk can arise from impacts of company activities , and company relationships Risks can arise from impacts of other actors, their perceptions and their expectations Risks can arise from indirect business impacts Country or Region specific risks
Social risk and impacts framework Community HSE 0.1: HSE Risk Management WR2297: Indigenous & tribal peoples IFC Performance Standard 5 (etc) Impact Assessment Guidelines Extractive Ind Transparency Initiative (EITI) HSE APOS: Security Management Voluntary Principles on Security and Human Rights (FR11) VP Implementation Program FR11: Core ILO principles, national law Supply chain risk project <ul><li>Core labour standards </li></ul><ul><li>Child labour </li></ul><ul><li>Forced labour </li></ul><ul><li>Right to organize </li></ul><ul><li>Discrimination </li></ul><ul><li>Poor working conditions and pay </li></ul><ul><li>Migrant labour abuse </li></ul><ul><li>Workplace health and safety </li></ul>Armed security: public or private Use of Statoil assets by armed groups (police, military, armed guards) Other collaboration with armed groups Violent conflict in area / on site / among workers Labour Security Context Focus Issues Gov. Docs/ Initiatives Land acquisition Involuntary resettlement Indigenous and tribal peoples’s rights Prior and informed consultations Impacts on livelihoods, social organisation, culture Emissions/discharges/waste/Oil spill Use of resources (e.g. water) Local content Lack of transparency, corruption Royalty sharing, wealth distribution Political, legal, institutional context Human rights situation Economy Infrastructure & services Stakeholder expectations Poverty and social issues Labour quality and availability Law and order
Integrating social risk management CSR in the Capital Value Process (CVP) <ul><li>Social risk review </li></ul><ul><li>Early Phase Risk Assessment </li></ul><ul><li>Impact assessment </li></ul><ul><li>Stakeholder engagement </li></ul><ul><li>CSR plans & Social investments </li></ul><ul><li>Monitoring & reporting </li></ul><ul><li>Ongoing dynamic risk mapping </li></ul>CSR DG requirements and involvement
Integrating CSR across operations <ul><li>living our values </li></ul><ul><li>Training &competence </li></ul><ul><li>Staff appraisal & incentives </li></ul><ul><li>Ethics Committees </li></ul><ul><li>Stakeholder start-up meetings </li></ul><ul><li>Risk and impact assessments </li></ul><ul><li>Monitoring & follow-up </li></ul><ul><li>CSR and HSE plans/programmes </li></ul><ul><li>Arena: Independent reviews in CVP </li></ul><ul><li>Dialogue and follow-up with key stakeholders </li></ul><ul><li>Annual and Sustainability Report </li></ul><ul><li>Ethics Helpline </li></ul><ul><li>Industry fora and partner meetings </li></ul><ul><li>Screenings & prequalification </li></ul><ul><li>Contract clauses </li></ul><ul><li>Dialogue and follow-up </li></ul><ul><li>Driving efficiency and cost-reductions </li></ul><ul><li>Access to new resources </li></ul><ul><li>Improved project execution </li></ul><ul><li>Long-term growth and sustainability </li></ul>Business enabler Working with partners Stakeholder engagement Risk management Awareness / Competence Integrating CSR
Human rights <ul><li>Commitment to global standards : </li></ul><ul><ul><li>Universal Declaration on Human Rights </li></ul></ul><ul><ul><li>ILO Declaration on Fundamental Principles and Rights at Work </li></ul></ul><ul><ul><li>UN Global Compact Principles </li></ul></ul><ul><ul><li>Voluntary Principles on Security and Human Rights </li></ul></ul><ul><ul><li>OECD Guidelines for Multinational Enterprises </li></ul></ul><ul><li>Respect the rights of the Indigenous Peoples </li></ul><ul><li>Human rights risk assessment to be conducted in countries with high human rights risk </li></ul><ul><li>Suppliers and partners to share the same principles </li></ul>
Labour standards <ul><li>Statoil and its suppliers shall comply with international labour standards . </li></ul><ul><li>Specific reference to ILO Declaration on Fundamental Principles and Rights at Work: </li></ul><ul><ul><li>Freedom from discrimination in employment </li></ul></ul><ul><ul><li>Freedom of association and the right to collective bargaining </li></ul></ul><ul><ul><li>Prohibition on forced or compulsory labour </li></ul></ul><ul><ul><li>Prohibition on child labour </li></ul></ul><ul><li>Minimum age of employment (15 years, or 18 years for hazardous work) </li></ul><ul><li>Comply with all applicable laws and regulations for terms and conditions of employment </li></ul><ul><li>Statoil and its suppliers shall not have any involvement in human trafficking . </li></ul>
Routines for managing Human Rights and Labour Standards in the supply chain <ul><li>Standards in the procurement process: in pre-qualification & evaluation phase prior to contract award, & through out contract administration </li></ul><ul><li>Integrity Due Diligence: a pre-qualification requirement for all prospective business relationships </li></ul><ul><li>Achilles Joint Qualification System: for all suppliers based within or supplying to Norwegian and Danish continental shelves </li></ul><ul><li>Voluntary Principles for Security and Human Rights: strict requirements for security contractors’ selection; implementing VPs & reporting on this implementation </li></ul><ul><li>Sustainability screening & audits of suppliers and producers of biofuels for trading. </li></ul><ul><li>Supplier Declaration: required to be signed in pre-qualification phase by all potential suppliers with contract value above 7 MNOK </li></ul><ul><li>Company Representative responsible for contract management & follow-up & monitoring of Supplier Declaration </li></ul><ul><li>Risk based follow-up and monitoring of suppliers/contracts. </li></ul>Procurement 2009: over NOK 100 billion Total number of suppliers (2009): around 26000 Ongoing investment in supplier development & training Example 1
Local opportunities: Canada <ul><li>Strategy </li></ul><ul><li>No local company excluded from bidding on and working for Statoil </li></ul><ul><li>Standard of excellence would not be watered down (same expectations) whether they are a multi-national company or a one person operation </li></ul><ul><li>Where needed we support training and capacity building </li></ul><ul><li>Local Opportunity Centre </li></ul><ul><li>Operational since September 2009 </li></ul><ul><li>Systematic and integrated approach to procurement and stakeholder engagement </li></ul><ul><li>Local residents, businesses and government agencies access to information on operations </li></ul><ul><li>Local contractors access to the proper information, knowledge and training </li></ul><ul><li>Other industry interested in joining LOC, supports our goal of being the “operator of choice” in the Athabasca oil sands region </li></ul><ul><li>Provides a central neutral location and required resources for internal and external stakeholders </li></ul><ul><li>Employee & Employer resources offered through the Government of Alberta – Department of Employment and Immigration </li></ul><ul><li>Independent Business Development & Consulting services provide by The Business Link </li></ul>Example 2
Statoil is an international energy company with operations in 34 countries. Building on more than 35 years of experience from oil and gas production on the Norwegian continental shelf, Statoil is committed to accommodating the world's energy needs in a responsible manner, applying technology and creating innovative business solutions. Statoil is headquartered in Norway with 20,000 employees worldwide, and is listed on the New York and Oslo Stock Exchange. For more information, please visit www.statoil.com
Thank you. Managing Social Risks and impacts : Statoil’s approach Anupama Mohan Lead Advisor, CSR www.statoil.com