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Statoil profits soar, safety worries too

Norway’s state-controlled oil company Statoil reported a major jump in profits on Wednesday at a time when safety concerns are gushing as well, mostly over Statoil’s troubled Gullfaks installation in the North Sea. Employees fear management is putting profits before safety, something the bosses firmly deny.

Statoil CEO Helge Lund faces a challenge in winning back his employees' confidence. PHOTO: Statoil/Harald Pettersen

Statoil reported a 27 percent jump in fourth-quarter profits (external link), to  nearly NOK 43 billion (USD 7 billion) and a solid jump in full-year profits as well, linking the results mostly to higher oil prices. Statoil CEO Helge Lund noted that management had expected even better results, but the company was hit by high maintenance costs, “specific operational issues” and lower production.

Among the “issues” that Statoil is dealing with was the near blow-out last year and forced well closures at Gullfaks, along with sharp criticism from state regulators. That seems to have unleashed a crisis in confidence among the employees.

Newspaper Aftenposten reported Wednesday morning that employees, in an internal meeting over Statoil’s own Intranet system, have claimed management is thinking more about Statoil’s economy than safety. One key employee, who has served as a critical link between workers and management, believes Statoil is in the process of “organizing itself into one big accident.”

Owe Ingemann Waltherzøe was the company’s main ombudsman on safety issues until this week, when he resigned in protest over how management is tackling the safety issues on Gullfaks. He earlier had claimed Gullfaks was understaffed and that employees were “scared to death” to go to work on the rig. Now he claims “Helge Lund and Statoil management don’t understand” the serious nature of the situation.

“There is a widespread consensus (among workers) that safety efforts are restricted to speeches made at parties,” Waltherzøe told Aftenposten. He believes management’s eagerness to reorganize what he called a “high-risk” company means they don’t want to recognize the workers’ and their representatives’ safety concerns. “It’s not popular to make negative remarks in Statoil,” Waltherzøe said.

‘Goals not carried out in practice’
Other employees, reports Aftenposten, expressed a clear lack of confidence in the online meeting where they could pose questions anonymously. One worker, for example, said that even though Statoil publicly stresses that employee health, safety and the environment must come first, such lofty goals are not carried out in practice. He claimed that critical maintenance work is postponed or not completed if it means production must be halted, according to Aftenposten, and also said important safety improvements are cut because they cost too much.

Statoil management claims they are indeed concerned with safety issues. At present, 50 of 178 wells are closed on Gullfaks because of fears over leakage and pressure problems. At a press conference last week, nearly a dozen managers admitted they “haven’t been good enough” at informing either regulators or others about problems on Gullfaks. The well closure means a major drop in production, but Statoil didn’t think it was serious enough to inform the stock market.

Øystein Michelsen, Statoil’s executive in charge of development and production in Norway, claimed he and his colleagues “have control over the situation” though. He said there have been no leaks at Gullfaks, and there are no indications the problems will reduce reserves.

Statoil reported this week that it had found gas and condensate around two kilometers west of the Gullfaks South field, estimated at between 19 and 75 million barrels of recoverable oil equivalent. Production concerns remain an issue, and the problems on Gullfaks are hurting Statoil’s outlook for 2011. Others note the prospects for new major oil and gas discoveries in the North Sea are slim.

Views and News from Norway/Nina Berglund
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