At Statoil, the way we deliver is as important as what we deliver. Copyright Statoil 2016 The Statoil Book - version 3.3 3

Transcription

1 The Statoil Book

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3 At Statoil, the way we deliver is as important as what we deliver. Copyright Statoil 2016 The Statoil Book - version 3.3 3

4 Dear colleague Statoil is an international energy company with a proud history. Safe and secure operations have always been our foundation, with no room for compromise. One incident can ruin years of improvement. Keeping our people safe will always be my top priority and my greatest responsibility. We have a clear vision for Statoil as a company that is shaping the future of energy. There are three main elements for the success of our vision. First, our business must be competitive. Second, we need to create lasting change in terms of how we run the company and set an example for how the oil and gas industry must transform. And third, we will be a leading provider of energy for a low-carbon future. Competitiveness will be crucial as we prepare for new challenges. We are in a good position, because we are a better company today than we have ever been. But there is further to go. We need to ensure our company is competitive at all times and in every situation because there is no escape from the realities of the marketplace. My ambition is to grow our business. Staying competitive is the only way we can do that. Statoil is recognised as one of the world s most innovative companies. We have pushed the boundaries of technology and imagination to go deeper and colder. Now we need to put those capabilities to work as we transform our company and our industry. Let us use our great achievements as encouragement as we pursue a unique opportunity to break away and radically change the way we work. Simplification is a vital part of our agenda. It is not about cutting costs by doing less. It means getting to the core and doing more with less. LEAN is a concept and a way of working that more at Statoil are getting to know. It is a philosophy of continuous improvement, through involvement and collaboration. And it applies to all of us. At the same time, we need to prepare for a low-carbon future. How we produce oil and gas will be increasingly important. Therefore our ambition is to be the most carbon-efficient oil and gas producer. And demand for renewable energy is growing, offering new industrial opportunities and new ways of using our technology and expertise. 4 Copyright Statoil 2016 The Statoil Book - version 3.3

5 Our management system consists of principles, requirements and recommendations which support our organisation in fulfilling the tasks required to achieve our objectives. The Statoil Book is the foundation of how we conduct our business. It sets standards for our behaviour, our delivery and our leadership, and it is clear about what is required and expected of each of us. I expect all leaders to be role models for how to use and improve our management system. We are a global company of thousands of individuals, working together to create lasting value for our owners, our customers and the communities in which we live and work. We take responsibility for one another and our company s future, knowing that personal ownership and commitment lead to broader success. Each and every one of us must pursue the highest standards of excellence in all areas of our business. Therefore, my single most important message to each one of you is this: You can make a difference. Your expertise, your commitment and the way you work with others are essential for us to realise our vision and to be the company of choice in the global marketplace. Eldar Sætre President and CEO It is our people, the values that we share and our collaborative culture that really set Statoil apart. This is where we are different from so many of our peers. This is something we can all be very proud of. These are also qualities and a legacy we must safeguard as we shape the future of Statoil. Copyright Statoil 2016 The Statoil Book - version 3.3 5

6 Part I Title: The Statoil Book Version: 3.3 Valid from: 5 January 2016 Validity area: Statoil group all locations Classification: Open Owner: Function owner management system The Statoil Book will be printed in updated versions when deemed necessary. However, any changes will be updated in the electronic version as and when required, and this will always represent the most recent edition. The career model on page 23 has been inspired by Charan, R, Drotter, S & Noel, J (2001). The leadership pipeline. Liability disclaimer None of the provisions of the Statoil Book are intended to be construed as creating any right(s) enforceable by a third party and all third-party rights implied by law are, to the extent permissible by law, excluded. Our management system Introduction 10 Our management system 11 Our values 14 People and leadership People partnership 18 Our leadership 19 6 Copyright Statoil 2016 The Statoil Book - version 3.3

7 Part II Part III Operating model Organisational principles 26 Ambition to Action 29 Compliance and leadership 36 Capital Value Process 38 Arenas 40 Management system governance 41 Assurance 42 Assurance roles 43 Corporate policies Safety 54 Security 56 Sustainability 58 People 60 Communication 62 Risk management 64 Finance and control 66 Procurement 68 Ethics 70 Managing information 72 Human rights 73 Corporate governance Corporate governance 46 Governing bodies 46 Authorities and internal control in Statoil 48 Appendices Appendix A Organisation Appendix B Decision authorities Appendix C Control in subsidiaries and joint ventures Appendix D Committees Appendix E Capital Value Process Appendix F Code of Conduct Appendices are available electronically Copyright Statoil 2016 The Statoil Book - version 3.3 7

8 Our management system Introduction 10 Our management system 11

9 Our management system We have a management system which defines how we work and describes how we lead and perform our activities. Copyright Statoil 2016 The Statoil Book - version 3.3 9

10 Introduction Our management system has three main objectives: 1. Contribute to safe, reliable and efficient operations and enable us to comply with external and internal requirements 2. Help us to incorporate our values, our people and our leadership principles in everything we do 3. Support our business performance through high-quality decision-making, fast and precise execution, and continuous learning Fundamentals Requirements Recommendations We expect commitment to and compliance with our management system. We expect leaders to be role models for how to use and comply with the management system. Every leader is responsible for ensuring that their people know where to find the relevant governing documents, work in accordance with our management system and adhere to country-specific laws and regulatory requirements. 10 Copyright Statoil 2016 The Statoil Book - version 3.3

11 Our management system Our management system Our management system is the set of fundamentals, requirements and recommendations which support our organisation in fulfilling the tasks required to achieve our objectives. Fundamentals Are essential regulations for the company and considered to be key success factors for Statoil to achieve its strategic objectives Describe what to achieve and how, over time, Statoil drives performance towards internal and external stakeholders in a competitive environment Cover values, principles, policies, mandates and declarations. They also cover expectations for function and process areas including definition of business tasks with identified risks and performance parameters Are valid corporation-wide without exception Requirements Are established to manage risks, ensure safe operations and efficiency, or to comply with external regulations when performing tasks Describe what to comply with when performing tasks Cover mandates, definitions, key controls, tasks, defined outcomes, methods and required expertise Are made valid based on business needs and must be followed where valid and applicable for the task, unless a dispensation is in place Recommendations Are established to support the fulfilment of a fundamental or a requirement Describe a suggestion or proposal for the best course of action when performing a task and are based on the collective learning and experience in the company. Recommendations promote standardisation Should be followed where made valid and applicable for the task Copyright Statoil 2016 The Statoil Book - version

12 Our values Our values 14

13 Our values Our values embody the spirit and energy of Statoil. Our values are essential if we are to succeed over time in a competitive environment. They are at the core of our management system. Our values drive our performance and guide us in how we do business, and in how we work together and towards external stakeholders. Copyright Statoil 2016 The Statoil Book - version

14 Courageous Be imaginative and ambitious, and stimulate new ideas Use foresight, and identify opportunities and challenges Challenge accepted truths and enter unfamiliar territory Make clear demands on each other and push for constructive change Understand and manage risk Open Be truthful and act with integrity Be curious, work together and share experience Promote and value diversity Communicate in a precise way, give and accept constructive feedback Bring up ethical issues and challenges immediately 14 Copyright Statoil 2016 The Statoil Book - version 3.3

15 Our values Hands-on Deliver on promises Continuously develop sound expertise, demonstrate commercial awareness and customer orientation Strive for simplification and clarity, and focus on value-adding activities Act decisively and be loyal to decisions Show dedication and endurance, follow through and pay attention to important details Caring Cause zero harm to people and prevent accidents Reduce the negative impact of our activities and products on the environment Act within the law and comfortably within our own ethics policy Demonstrate social responsibility and contribute to sustainable development Respect the individual, help others to succeed and contribute to a positive working environment Copyright Statoil 2016 The Statoil Book - version

16 People and leadership People partnership 18 Our leadership 19

17 People and leadership It is our people who enable us to meet our challenges and deliver on our promises. We need your skills and personal commitment as well as effective leadership to reach our goals. We believe in involving our people and their appropriate representatives in the development of our group. Copyright Statoil 2016 The Statoil Book - version

18 People partnership We establish and grow a partnership between our group and the individual based on clear expectations and a mutual commitment to the way we behave, deliver and develop. What you should expect from our group and what the group expects from you We: Promote a stimulating work environment guided by our values and a commitment to your personal and professional development Provide a good match between your professional interests and goals and challenging and meaningful job opportunities Build a high-performing environment, and give direct feedback on your performance Recognise and reward your performance based equally on what you deliver and how you behave Value diversity and provide equal opportunities You: Live our values in all aspects of your work Recognise that change is vital to our business, commit to agreed objectives, and strive to deliver beyond expectations Take the initiative and look continuously for ways to improve performance Take responsibility for your own learning and development, continuously build new skills and share your knowledge Respect and motivate others, are a team player and create effective working relationships Are proactive in ensuring high-quality decision-making. Once a decision has been made, you promote that decision and focus your energy on its execution 18 Copyright Statoil 2016 The Statoil Book - version 3.3

19 People and leadership Our leadership If you accept leadership responsibility in Statoil, you will be required to meet expectations which go beyond the people partnership. These expectations are described in the leadership profile and in the leadership development principles. Statoil leaders have impact and deliver sustainable results Leadership profile INTEGRITY Be honest and build trust with others Be direct and raise issues early Advance our company and values in all you do, and place organisational success ahead of personal gain PERSONAL HUMILITY Know how others perceive you and how you can best influence others Continuously work on developing yourself Be humble, ask for feedback and help when needed WILLPOWER Have inner drive to enhance the performance of self, others and the business Have stamina, create optimism and energy, also in difficult times Be ambitious on behalf of the company, act decisively, drive change and be passionate about winning EXTERNAL ORIENTATION Understand external forces, create business opportunities, manage risks and adapt to reality Collaborate with stakeholders to strengthen our business and create innovative solutions Have a commercial mind-set, drive competitiveness and be cost conscious Copyright Statoil 2016 The Statoil Book - version

20 EXECUTION RIGOUR Manage the critical details, follow through and deliver on promises Collaborate across boundaries, develop and empower your team and people Have a strong focus on safety, capital efficiency, operating excellence, and compliance ACCOUNTABILITY Set clear direction, clarify responsibilities and accept your accountability Take full responsibility for whatever happens within your area, and never blame others or bad luck Celebrate and reward the right behaviour and outstanding delivery, and tackle poor performance Leadership development principles Our leaders are talent scouts, responsible for building our future leaders to meet our business goals Our leaders: drive their own development demand stretch assignments and embrace mobility develop both domain expertise and general leadership capabilities build strong and diverse teams grow the next generation of professionals and leaders 20 Copyright Statoil 2016 The Statoil Book - version 3.3

21 People and leadership is our common process for people development, deployment, performance and reward, and is an integrated part of our performance management. process 1 Ambition to Action for your team is reviewed Even Stronger Values survey is completed Pre-review meetings are held to ensure calibration of performance, potential and development Preparation November December People@ Statoil dialogue 2 Performance appraisal of last year s delivery and behaviour is carried out My Performance Goals for the coming period are set Short- and long-term development plans are established August October January March 4 Progress is reviewed on the basis of performance goals and development plans Required actions to reach goals and fulfill development plans are discussed Additions, revisions or updates to goals and development plans are agreed Follow-up dialogue April June Capability and deployment review 3 Organisational capabilities and gaps are identified on the basis of the business strategy Development actions for individuals, teams and the organisation are agreed Deployment actions are discussed and succession candidates identified Copyright Statoil 2016 The Statoil Book - version

22 Our common career model We have a common career model for leaders and professionals which guides us in developing the expertise required to meet our business needs. It provides a clear direction for your career planning, and highlights the broad range of career opportunities which we as a group can offer. The career model is based on stages in which progression depends on your performance and potential. It supports the creation of development plans and deployment opportunities. 22 Copyright Statoil 2016 The Statoil Book - version 3.3

23 People and leadership This model enables you to develop in both the professional and leadership pipelines, and movement between the two is both possible and encouraged. The professional pipeline The leadership pipeline Copyright Statoil 2016 The Statoil Book - version

24 Operating model Organisational principles 26 Ambition to Action 29 Compliance and Leadership 36 Capital Value Process 38 Arenas 40 Management system governance 41 Assurance 42 Assurance roles 43

25 Operating model The operating model is about how we manage our performance. It guides us to set the right priorities based on our values, and drives our performance through safe execution with precision, quality and speed. Copyright Statoil 2016 The Statoil Book - version

26 Organisational principles The manner in which we are organised influences how we deliver results. Our organisational principles define how we structure and manage our organisation. Our organisational principles define a simple organisational design which has the flexibility to meet the demands of a changing business environment. Principles 1. Value and performance are created in our combined asset-based and function-based organisation 2. The organisational entities have clear responsibilities and two distinctly defined roles; the line role and the support role 3. Responsibilities and authorities are established through the process of delegation to the line role and through the assignment of tasks to support roles in delivery entities 4. A single point of accountability applies 5. The line role has primacy, and acts in accordance with our management system Principle 1: Value and performance are created in our combined asset-based and function-based organisation Our organisation has two main types of entities; asset-based and function-based. Asset-based entities have a mandate to define, develop and operate assets in the value chain to ensure optimum return on investments Function-based entities have a mandate to deliver advice, services, products, projects and governing documentation to drive synergies and functional excellence across the group We have three different types of function-based entities, with a global mandate. Corporate centre entities support the CEO and the corporate executive committee (CEC) in the development of Statoil, key business decisions and in driving a valuesbased performance culture. They develop and improve the Statoil fundamentals and drive simplification and improvements across the group 26 Copyright Statoil 2016 The Statoil Book - version 3.3

27 Operating model Delivery entities provide professional cost-effective services, products, projects and expertise across the group Arenas perform quality control and support quality decisionmaking Principle 2: The organisational entities have clear responsibilities and two distinctly defined roles; the line role and the support role The line role is responsible for people, results and performance. A solid line in organisational charts represents the organisational line dimension. The support role is responsible for deliveries of services, products and projects, and providing advice and expertise to other entities. Roles and responsibilities of organisational entities are described in governing documentation. Principle 3: Responsibilities and authorities are established through the process of delegation to the line role, and through the assignment of tasks to support roles in delivery entities Delegation is the establishment of responsibility through the organisational line role. The leader with delegated responsibility is accountable for the deliveries, agreed contributions, resource ownership and the People@Statoil process. Assignment of tasks is the establishment of responsibility across organisational entities for specific deliveries. Assignments of tasks to support roles in the delivery entities are regulated through the use of service level agreements or task and project assignments. CEO Line role CEO Delegating responsibilities to line role CEO Assigning responsibilities for tasks to support role Asset-based entity Delivery entity Asset-based entity Delivery entity Asset-based entity Delivery entity Support role Copyright Statoil 2016 The Statoil Book - version

28 Local delivery entities work in an integrated way with the local asset-based entity. The local delivery entity is responsible for delivering functional excellence. The delivery entity has resource ownership of its own people. To strengthen local commitment a coordinated Ambition to Action and People@Statoil process may be agreed upon with the asset based entity. Principle 4: A single point of accountability applies A single point of accountability means that one individual is accountable for actions and measurable deliveries. A single point of accountability applies also when several organisational entities contribute in deliveries. Contributors are accountable according to the service level agreements, task and project assignments, and towards own line. The individual s responsibility for results and performance is independent of whether they use resources from their own entity or from other entities, or whether they use external resources. Assignment relationships are normally not shown in organisational charts. If there is a need to illustrate a strong interdependency with another entity a dotted line may be applied. In such a formalised relationship collaboration normally takes place through leadership team participation. Principle 5: The line role has primacy and acts in accordance with our management system If conflicts of interest arise between the line role and a support role, the line role has primacy. When exerting primacy, the line role acts in accordance with our management system, and the defined roles in the organisation. Delivery entity 1 Asset-based entity Single point of accountability Delivery entity 2 Conflict of interests are to be resolved at the lowest relevant level. If resolution cannot be reached, the support role can take the conflict to a higher level within own line. Procurement Development entity Drilling In the case where there is a conflict of interest related to an assignment between an asset-based entity and a delivery entity, the asset-based entity has primacy and the authority of the final decision. 28 Copyright Statoil 2016 The Statoil Book - version 3.3

29 Operating model Ambition to Action Ambition to Action is our integrated performance process, and has three purposes: Translate ambitions and strategies into Strategic objectives - where are we going? Key performance indicators - how do we measure progress? Actions - how do we get there? Team or individual goals - what is our or my contribution? Create a dynamic and flexible execution framework Activate values and people and leadership principles Our business environment is demanding, dynamic and unpredictable. We must continuously evaluate risk and respond quickly when the unexpected occurs and when opportunities or threats arise. This is best achieved through a dynamic and event-driven performance management process. Ambition to Action balances alignment around strategic direction and common business processes with empowerment and local business responsibility. To support this, the following is an integrated part of the process: dynamic resource allocation forward-looking and action-oriented follow-up holistic performance evaluation learning through sharing and improving Ambition to Action covers five perspectives: people and organisation health, safety and the environment operation market finance These perspectives are dependent on each other and have a cause-and-effect relationship. Together, they build on one another and require us to address what creates and drives good performance in the short and long term while maintaining focus on all our stakeholders. Ambition to Action separates target-setting, forecasting and resource allocation from each other in order to improve the quality of these activities. Ambition to Action is established and followed up in our management information system MIS, and through individual goals set in People@Statoil. Copyright Statoil 2016 The Statoil Book - version

30 The Ambition to Action process Strategy translation and target setting ambitious Planning expected outcome holistic assessment Strategic objectives KPI selection and targets Actions and forecasts My Performance Goals (MPG) Performance evaluation and rewards Execution - dynamic resource allocation Learning - sharing and improving Follow-up - forward looking and action oriented Ambition to Action key principles Performance is about performing better than those we compare ourselves with Do the right thing in the actual situation, guided by the Statoil Book, your Ambition to Action, decision criteria and authorities, and sound business judgement Within this execution framework, resources are made available or allocated case-by-case Business follow-up is forward-looking and action-oriented Performance evaluation involves a holistic assessment of delivery and behaviour 30 Copyright Statoil 2016 The Statoil Book - version 3.3

31 Operating model Strategy translation and target-setting Strategy development is a risk based and event-driven process, defining ambitions and direction. Ambition to Action translates strategies into more specific strategic objectives with a medium-term time horizon across all five perspectives. A good strategic objective provides clear guidance and direction, engages and motivates. High performance is about performing better than those we compare ourselves with through continuously improving. We set objectives and targets inspired by expectations from customers, shareholders, partners and other stakeholders, and by the performance of competitors and other relevant benchmarks, internal or external. We measure delivery against strategic objectives by using key performance indicators (KPIs). A good KPI: measures progress against strategic objectives is relative, comparing our own performance to others, or connects the use of resources to deliveries (e.g. unit cost) primarily addresses areas where improvement is required Short and longer term KPI targets reflect the direction and ambition level of the strategic objectives. KPI targets have business driven time horizons which may vary depending on urgency, lead time and complexity of what we aim to achieve. Business challenges may differ significantly across the organisation, and a top-down cascading of strategic objectives, KPIs and actions should normally be avoided. Ambition to Action requires strong line ownership to be a meaningful and value-adding process enabling teams to manage their own business. When establishing Ambition to Action for own entity it is therefore recommended to translate relevant Ambitions to Actions to reflect own business realities. In this way a strong local ownership and alignment with overall corporate ambition and direction is maintained. Strategic objectives, KPIs and KPI targets are updated when necessary. Major changes are to be approved by the relevant leader. The entity initiating an update is responsible for informing other affected entities. KPIs may be challenging to establish in some areas. Clear strategic objectives and actions can secure focus and direction if specific KPIs cannot be developed. Copyright Statoil 2016 The Statoil Book - version

32 Planning Planning starts with understanding risk and actions needed to manage risk and includes: actions required to move towards strategic objectives and deliver on KPI targets, including action planning (what, how, who, when) unbiased forecasts of these actions expected effect on relevant KPIs, providing an early warning of possible gaps in reaching targets and for other financial/operational trends A target is what we want to happen; a forecast is what we expect to happen. The purpose of a forecast is to support decisionmaking. Forecasts must therefore be unbiased and reflect the expected outcome. Actions and forecasts are dynamic and updated as required. Updates are event-driven rather than calendar-driven. The forecasting horizon varies with the type of business and event. The need for new or revised actions is continuously reviewed as part of the business follow-up. My Performance Goals People@Statoil is an integrated part of the Ambition to Action process. My Performance Goals (MPG) are set in two dimensions, delivery and behaviour, reflecting that delivery and behaviour are equally important and weighted. Delivery goals are defined or inspired by the Ambition to Action for your entity and other relevant entities. If MPG delivery goals for all team members are defined directly by Ambition to Action, individual responsibility for specific actions or KPI targets is set to clarify each team member s accountability and support performance evaluation. Using Ambition to Action in this way also makes it easier to manage changes, as they are maintained in one place only. Behavioural goals help us to live our values, and to address the behaviour required and expected in order to achieve our delivery goals. Behavioural goals are also set on the basis of feedback from the People@Statoil dialogue, the Even Stronger Values (ESV) survey, Global People Survey (GPS) results, and day-to-day observations from leaders and colleagues. 32 Copyright Statoil 2016 The Statoil Book - version 3.3

33 Operating model Execution dynamic resource allocation Execution is based on a framework which is dynamic and flexible but has clear boundaries. The execution framework Ambition to Action The Statoil Book Our management system Empowerment and room to act and perform Sound judgement Dynamic but with clear boundaries Decision authorities and criteria The purpose of the execution framework is to create a dynamic, efficient and self-regulating resource allocation which optimises value creation within our human and financial resource capacities. Within this framework, resources are made available for operations through various mechanisms or are allocated at project decision points. Annual pre-allocation of resources should be avoided. Cost targets are established if and when necessary. These are primarily set using relative KPIs (unit cost or league tables). Absolute cost targets may be set if a significant change in activity and cost levels is required, but must be set at the overall rather than the detailed level to secure the necessary flexibility. Even if no cost targets are set, both actual and forecasted cost trends are monitored and corrective measures taken as required. All entities should continuously challenge their own efficiency, level of activity and resource use. Agile and iterative project methodologies are recommended for business support, research and development, and technology projects. Copyright Statoil 2016 The Statoil Book - version

34 Follow-up; forward-looking and action-oriented Business follow-up is an assurance activity conducted through Ambition to Action reviews. Follow-up is forward-looking and action-oriented, and focuses on gaps between forecasts and targets, and on the development of underlying risk drivers. If positive gaps, which risks could jeopardise this forecast? If negative gaps, which actions must be taken to get back on track? Corrective actions are described in the MIS system. Holistic performance evaluation Performance evaluation is based on your individual goals. It is a holistic evaluation, combining measurement and assessment, and addresses both delivery and behaviour. Since KPIs are only indicators, sound judgement and hindsight information should be applied before drawing final conclusions by asking the following questions: Did KPI deliveries contribute to reaching the strategic objectives? How ambitious were the targets? Should changes in assumptions be taken into account? Were agreed or necessary actions taken? Are the results sustainable? The outcome of the delivery and behavioural evaluation form the basis for individual salary and variable pay reviews, and provide input for the following year s development plan. The evaluation aims to give a clear picture of both performance and potential. 34 Copyright Statoil 2016 The Statoil Book - version 3.3

35 Operating model Learning sharing and improving Business follow-up and performance evaluation are key events for learning in order to improve our performance. To promote sharing of knowledge and best practice across the organisation, information on all Ambition to Actions should be made open and available unless it is determined to be confidential information. The use of benchmarking KPIs in Ambition to Action is recommended in order to learn from high-performing entities inside and outside the organisation. Copyright Statoil 2016 The Statoil Book - version

36 Compliance and Leadership The Compliance and Leadership model describes how we plan, execute, evaluate and learn from any task; it is the way we work. The five steps in the model form a systematic action pattern denoted the A-standard. Using the model in how we solve our task will increase our precision and quality. This will then enable us to achieve the three main objectives of the management system (see page 10). Compliance with the model means executing tasks in accordance with the A-standard, using clear communication to achieve precision and quality in each step. Leadership means active demonstration of skills in use of the model, of our values, people partnership, and leadership principles by the task leader. Compliance and Leadership Model A-standard: How we execute tasks Understand task and risk Identify and understand requirements Manage risk Execute task Evaluate result Extract learning Task Leadership Communicate how we work when we execute tasks Be a role model in your interaction with others Train, observe, follow up and guide your group when using the model to ensure effective collaboration Desired result 36 Copyright Statoil 2016 The Statoil Book - version 3.3

37 Operating model Leaders shall enable co-workers to execute tasks independently by using the model and through effective interaction. This is done by fostering a clear understanding of the model through training, observing and guiding co-workers. Good communication Effective interaction, and sound use of the team s joint competences, are prerequisites for gaining a shared and precise understanding in each activity step. To achieve this, all team members must demonstrate the communication skills that support this. These include being able to: Share own understanding with others Explore and clarify the views and perceptions of others Summarise the group s understanding, and where the group currently is in the process at all times Stepwise description of the model Step 1: Understand task and risk: Ensure a shared understanding of the delivery, the sub-tasks that must be performed, the purpose of the task, necessary relationships (context) and the risks associated with executing the task. Identify knowledge and experience that may contribute to the understanding of the task, its risks and effective execution. Step 2: Identify and understand requirements: Identify and develop a shared understanding of relevant requirements for this task. Most tasks are subject to specific requirements in the management system. For some tasks defined expectations are added. Step 3: Manage risk: Determine how identified risks not addressed by the management system shall be managed. Step 4: Execute task: Assess and manage changes in risks and assumptions continually while executing the task. Step 5: Evaluate result. Extract learning: Assess progress, gaps, experience, and learning. Propose improvements and share best practice. Copyright Statoil 2016 The Statoil Book - version

38 The Capital Value Process The Capital Value Process (CVP) is our decision process for investment projects, including cessation projects. CVP is a structured and comprehensive approach to project identification, planning and execution, where an investment project is developed from a business opportunity into the most profitable operation for the total value chain. Business development opportunities or acquisitions enter into the relevant decision gate as the project matures. Capital Value Process (CVP) DG0 DG1 DG2 DG3 DG4 Business identification Business planning Concept planning Definition Execution Operations Acquisitions/farm-ins/mergers Screening business opportunities Bid preparations Concession/ Negotiations DGA DGB DGC 38 Copyright Statoil 2016 The Statoil Book - version 3.3

39 Operating model In each project phase, work is performed according to corporate requirements, and the following CVP arenas are mandatory: The project owner is responsible for securing a good and consistent investment decision basis in the CVP. Stakeholder Start-up Meeting Steering Committee Arena review The following decision gates are defined at different stages between project phases in the maturation of a project: DGA: approval to develop a business opportunity DGB: approval to negotiate DGC: accept a negotiated agreement/decision to assess a new exploration or business opportunity DG0: approval to start appraisal/business planning DG1: approval to start concept planning DG2: project pre-sanction DG3: project sanction DG4: start operation Copyright Statoil 2016 The Statoil Book - version

40 Arenas The purpose of the arenas is to provide quality and consistency across the organisation before important decisions are made. Three arenas support quality in decision-making within their particular specialist skills: information technology arena technology arena investment arena The arenas ensure that decision-makers understand expectations for the end result, that risk exposure is realistic and that decision-making meets our requirements. The responsibilities of the arenas are outlined below: The information technology arena ensures that the portfolio of major IT initiatives support the company s strategy and creates ownership across the group. The arena must consider the consequences and risks of the company by providing their comments to the IT portfolio and the financial targets set. The technology arena endorses the technology development and implementation portfolio on a continuous basis, including funding, for line management approval. The technology arena ensures that the portfolio is clear, founded in the corporate technology strategy, supported by management and that ownership exists across the group. The investment arena performs an independent technical and commercial review before passing decision gates on exploration projects, on acquisitions and divestments involving a major commitment, and where there is significant risk or exposure. It provides the overall framework for the CVP and facilitates its implementation. Investment arena reviews are mandatory for investment decisions, for acquisitions and divestments requiring approval by the chief executive, and for exploration decisions requiring approval by the exploration executive. A copy of the conclusion of the investment arena review shall be included in the final decision document. The line organisation must take the investment arena s recommendation into consideration. It is, however, line management that makes the final decision and which is ultimately accountable. 40 Copyright Statoil 2016 The Statoil Book - version 3.3

41 Operating model Management system governance The chief operating officer (COO) is accountable for ensuring that the management system framework and tools needed in the organisation to enable safe, efficient and reliable operations are in place. The head of business areas and corporate centre entities is accountable for establishing and implementing a portfolio of valid governing documentation for their own area. The head of business areas and corporate centre entities is accountable for maintaining and developing governing documentation on behalf of our company to enable safe, efficient and reliable operations. Experience, knowledge, needs, risks and changes in business strategy or context may trigger a need for improvement of our management system. We follow a common, systematic model when we develop or improve governing documentation. Copyright Statoil 2016 The Statoil Book - version

42 Assurance Assurance is the outcome of processes that provide confidence and confirmation that the management system is effective, achieving its purpose and expected performance. The level of independence and frequency of assurance measures shall reflect the complexity of operations, level of risk and performance history. Assurance is part of our ambition to action process and an integral part of the way we work. Assurance activities are divided into three levels: self-assessments, verifications, and audits. Self-assessment assurance is the key control mechanism conducted within a business entity. Audits and verifications represent independent assurance activities and can be performed by internal or external parties. Increased level of complexity and risk Audits Verifications* Self-assessments Increased level of independence Audits are independent and objective assurance activities with a formal mandate from the board of directors. Verifications are a business area management tool for independent assessments of high impact risks. Self-assessments are a set of assurance measures employed to provide confirmation and confidence that operations are run in accordance with the management system objectives. *Chief financial officer approves SOX 404 verification plan. 42 Copyright Statoil 2016 The Statoil Book - version 3.3

43 Operating model Assurance roles Business Area Accountable for effective conformance with and improvement of the management system: Conduct self-assessments in the execution of business processes. Initiate independent assessments when required. Document results, findings, actions and learning. Corporate Centre* Responsible for having oversight over business processes and risks: Monitor performance, advise and support business areas. Drive continual improvement and learning across the business areas. Advise and support CEC and provide input to the audit programme. Corporate Audit Accountable on behalf of the board of directors for performing independent and objective audits of areas with significant risks. Prepare the audit programme. Conduct internal audits. Give advice and facilitate learning. *) In addition, corporate sustainability has the same role as corporate centre entities for assurance activities. Copyright Statoil 2016 The Statoil Book - version

44 Corporate governance Corporate governance 46 Governing bodies 46 Authorities and internal control in Statoil 48

45 Corporate governance Good corporate governance is a prerequisite for a sound and sustainable company, and is built on openness and equal treatment of all shareholders. Our governing structures and controls help ensure that we run our business in a justifiable and profitable manner to the benefit of our people, shareholders, partners, customers and society. Copyright Statoil 2016 The Statoil Book - version

46 Corporate governance We are a public limited company with a governance structure based on Norwegian law. Our main share listing is on the Oslo Stock Exchange, and our share is also listed on the New York Stock Exchange. According to our articles of association, our object is to engage in exploration, production, transportation, refining and marketing of petroleum and petroleum-derived products, and other forms of energy, as well as other business. We are responsible for marketing and selling the Norwegian government s petroleum, derived from the state s direct financial interest (SDFI) or paid as royalty in kind. Governing bodies The board of directors The board of directors of Statoil ASA is responsible for the overall management of our group, and for supervising its activities in general as further defined in the board s rules of procedure. The board handles matters of major importance or of an extraordinary nature. However, it may require that any matter be referred to it. The board appoints our president and chief executive officer (CEO), and establishes the working instructions, powers of attorney, and terms and conditions of employment for the chief executive. The board has three sub-committees. The audit committee s role is to support the board in exercising its management and monitoring responsibilities, particularly in respect of accounting and financial reporting, and to ensure that our group has an independent and effective external and internal audit system. The safety, sustainability and ethics committee s role is to assist the board in its supervision of the company s safety, sustainability and ethics policies, systems and principles with the exception of aspects related to financial matters. The role of the compensation and leadership development committee is to assist the board of directors in its work relating to the terms of employment for Statoil s CEO and the main principles and strategy for the remuneration and leadership development of senior executives in Statoil. 46 Copyright Statoil 2016 The Statoil Book - version 3.3

47 Corporate governance The general meeting The general meeting s tasks include approving our accounts and the allocation of net income, electing the members of our corporate assembly, and electing the members of the election committee. Our external auditor is independent of us and elected by the general meeting. The same firm of auditors should, as a general rule, be appointed for all our subsidiaries. If an auditor is appointed for joint ventures we operate, our external auditor must be used. Any deviation from this rule must be approved by the chief financial officer (CFO). Governing bodies The corporate assembly The corporate assembly has a duty to supervise the board and chief executive in their management of Statoil ASA. It takes decisions based on proposals from the board on matters related to substantial investments, measured against the total resources of our group, and in matters concerning the rationalisation and restructuring of operations which would result in a major change in the workforce. The corporate assembly is responsible for electing the board. Nomination committee General meeting Corporate assembly External auditor Board of directors Internal auditor Audit committee Safety, sustainability and ethics committee Compensation and leadership development committee President and CEO Copyright Statoil 2016 The Statoil Book - version

48 Authorities and internal control in Statoil The chief executive, the corporate executive committee and the role of the CFO The chief executive reports to the board of Statoil ASA, and has overall responsibility for our group as described in the board s rules of procedure. The chief executive is responsible for developing our business strategy and presenting it to the board for decision, for the development and execution of the business strategy, and for strengthening a performance-driven, valuesbased culture. As a general rule, issues should first be put to the chief executive before they are presented to the board. The chief executive selects the members of the corporate executive committee (CEC). Members of the CEC have a collective duty to safeguard and promote our corporate interests and to provide the chief executive with the best possible basis for setting directions, making decisions, ensuring execution and following up business activities. All CEC members take an active part in the deliberations of the CEC with the aim of promoting the collective interests of our group. The CEC will continuously develop our management system based on the requirements of corporate governance, risk management and the control system, and implement the system across our organisation. The CEC constitutes the corporate committees for safety, sustainability, audit and ethics. Corresponding committees are set up at the business area level with individual mandates. The chief financial officer (CFO) is the corporate controller and ensures critical follow-up of all business activities in our group. The CFO is responsible for: Providing reliable, relevant and sufficient financial information and control related to our business activities, and for assuring that information is based on corporate accounting principles Defining and following up corporate requirements for the Ambition to Action process Chairing the corporate risk committee which handles corporate risk management issues Defining our accounting and reporting principles and chairing the corporate disclosure committee Approving the SOX 404 verification programme together with the chief executive Together with the chief executive, reporting to the US Securities and Exchange Commission on the quality of internal control over financial reporting in accordance with sections 404 and 302 of the Sarbanes Oxley Act (SOX) 48 Copyright Statoil 2016 The Statoil Book - version 3.3

49 Corporate governance Controller and accounting manager The controller function ensures critical follow-up of all commercial activity at every level in the business areas and business units. The controller s main responsibilities are to: Challenge and support Ambition to Action and business decisions in the line Establish and maintain the Financial Model for the line within the Statoil framework Ensure quality in forecasting and financial reporting Ensure commercial quality control and independent assessment of business decisions Follow up improvement initiatives Controllers report professionally to the corporate performance management and risk entity, with a right and duty to inform on significant professional issues or matters of principle. The corporate accounting entity is responsible for the quality of accounting. Business area accounting managers are responsible for the quality of accounting in their respective entities, which includes ensuring consistent application of accounting principles and contributing to group accounting products. Accounting managers report professionally to the corporate accounting entity, with a right and duty to inform on significant professional issues or matters of principle. Control bodies Corporate Audit (COA) is the group s independent control body with the authority to conduct internal audits to assure that the business is subject to adequate management and control. The head of COA has a formal mandate and reports to the chief executive and the board. The responsibilities of the chief compliance officer in the legal entity include establishing our ethics policy and requirements, and the operation of our ethics helpline. This person ensures that compliance activities to counteract corruption are well organised and conducted in a satisfactory manner. The chief compliance officer shall also report on the implementation and effectiveness of the ethics policy and the anti-corruption compliance program to the chief executive, the board of directors and the board s safety, sustainability and Copyright Statoil 2016 The Statoil Book - version