The Statoil Book
At Statoil, the way we deliver is as important as what we deliver.
Dear colleague We are on a journey together to transform Statoil into a global energy company. We have a successful history of innovation and growth, and a distinctive values-based performance culture. Our vision of crossing energy frontiers represents both past achievements and the challenges we have to solve to continue developing our great company. At Statoil, the way we deliver is as important as what we deliver. Safe, secure and efficient operations are our top priority. Together, we create value for our owners with integrity. We have a strong framework for safety improvements and a clear security policy. The Compliance and Leadership model describes how we plan, execute, evaluate and learn from any task. This is the way we work in Statoil and your commitment is needed to continue to strengthen our performance. By using the model, you and your team will deliver with precision and quality. We face an increasingly competitive and complex industry environment, growing expectations from a broad set of stakeholders and high attention towards safety performance. Our leadership profile is aimed at making Statoil even more fit to meet these realities, and will serve as a catalyst to drive performance and accelerate our journey. Our management system contains the principles, policies and requirements we need to work safely and effectively. As part of the management system, this book describes the most important policies and requirements for our entire group. The Statoil book is the foundation of how we conduct our business. It sets standards for our behavior, our delivery and our leadership, and it is clear on what is required and expected of each of us. The Statoil Book is an important tool for you in your daily work and for us as a group. I expect you to understand and follow our principles and requirements. Statoil needs your personal commitment and contribution every day to reach our goals and to be an exceptional place to perform and develop. Helge Lund President and CEO Copyright Statoil 2013 The Statoil Book - version 3.1 3
Contents Part I Title: The Statoil Book Version: 3.1 Valid from: 5 July 2013 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 21 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 8 Our responsibilities 9 Our values 12 People and leadership People partnership 16 Our leadership 17 4 Copyright Statoil 2013 The Statoil Book - version 3.1
Part II Part III Operating model Organisational principles 24 Ambition to Action 27 Compliance and leadership 34 Capital Value Process 36 Arenas 38 Governing documentation 39 Process owners 40 Function owners 42 Monitoring 43 Corporate policies Safety 56 Security 58 Sustainability 60 People 62 Communication 64 Risk management 66 Finance and control 68 Procurement 70 Ethics 72 Managing information 74 Corporate governance Corporate governance 48 Governing bodies 48 Authorities and internal control in Statoil 50 Appendices Appendix A Organisation Appendix B Decision authorities Appendix C Control in subsidiaries and joint ventures Appendix D Committees Appendix E Capital Value Process Appendices are available electronically Copyright Statoil 2013 The Statoil Book - version 3.1 5
Our management system Introduction 8 Our responsibilities 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 2013 The Statoil Book - version 3.1 7
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 decisionmaking, fast and precise execution, and continuous learning Commitment to and compliance with our management system are a requirement. Our management system The Statoil Book Values People and leadership Operating model Corporate policies Function requirements Business area requirements 8 Copyright Statoil 2013 The Statoil Book - version 3.1
Our management system Our management system is the set of principles, policies, processes and requirements which support our organisation in fulfilling the tasks required to achieve our objectives. The management system is documented in governing documentation, which includes the Statoil Book, common function requirements as well as requirements specific to the business areas. 1. The Statoil Book covers the following topics 3. Business area requirements Our values: guiding our behaviour People and leadership: describing what we expect from our company, our people and our leaders Describe the organisation and operating model for the business areas and other organisational units. Business area requirements also include local governing documentation related to the common function and process areas. Operating model: describing our organisational principles, the way we work, and the way we manage and improve our performance Corporate governance: describing governing bodies, authorities and internal controls in our group Corporate policies: regulating our actions and decisions in important areas 2. Common function requirements Describe function requirement for function and process areas as well as work processes and technical requirements. Our responsibilities All our people are required to comply with relevant governing documentation, in addition to adhering to country-specific laws and regulatory requirements. Every leader is responsible for ensuring that their people know where to find the relevant requirements, understand how to use the management system and comply with the requirements. Leaders are role models for how to use the management system. All our people are responsible for contributing to governing documentation improvements. Copyright Statoil 2013 The Statoil Book - version 3.1 9
Our values Our values 12
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 2013 The Statoil Book - version 3.1 11
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 12 Copyright Statoil 2013 The Statoil Book - version 3.1
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 2013 The Statoil Book - version 3.1 13
People and leadership People partnership 16 Our leadership 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 2013 The Statoil Book - version 3.1 15
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 16 Copyright Statoil 2013 The Statoil Book - version 3.1
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 2013 The Statoil Book - version 3.1 17
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 18 Copyright Statoil 2013 The Statoil Book - version 3.1
People and leadership People@Statoil People@Statoil is our common process for people development, deployment, performance and reward, and is an integrated part of our performance management. People@Statoil 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 2013 The Statoil Book - version 3.1 19
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. 20 Copyright Statoil 2013 The Statoil Book - version 3.1
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 2013 The Statoil Book - version 3.1 21
Operating model Organisational principles 24 Ambition to Action 27 Compliance and Leadership 34 Capital Value Process 36 Arenas 38 Governing documentation 39 Process owners 40 Function owners 42 Monitoring 43
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 2013 The Statoil Book - version 3.1 23
Organisational principles How we are organised affects 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 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 four different types of function-based entities, with a global mandate. Corporate staff entities support the CEO and the corporate executive committee (CEC) in the development of Statoil, key business decisions and in driving a values-based performance culture. They develop and monitor corporate standards, and drive improvement initiatives Delivery entities provide professional cost-effective services, products, projects and expertise across the group 24 Copyright Statoil 2013 The Statoil Book - version 3.1
Operating model Process owners develop and improve the Statoil global work processes and drive simplification and improvement initiatives across the group. They monitor compliance of Statoil s global requirements and support business areas in deployment of key positions 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 2013 The Statoil Book - version 3.1 25
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. 26 Copyright Statoil 2013 The Statoil Book - version 3.1
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 2013 The Statoil Book - version 3.1 27
The The Ambition to to Action Action process process Strategy translation and target setting ambitious Planning expected outcome People@Statoil 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 28 Copyright Statoil 2013 The Statoil Book - version 3.1
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 2013 The Statoil Book - version 3.1 29
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. 30 Copyright Statoil 2013 The Statoil Book - version 3.1
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 2013 The Statoil Book - version 3.1 31
Follow-up; forward-looking and action-oriented Business follow-up is a monitoring 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. 32 Copyright Statoil 2013 The Statoil Book - version 3.1
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 2013 The Statoil Book - version 3.1 33
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 8). 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 34 Copyright Statoil 2013 The Statoil Book - version 3.1
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 2013 The Statoil Book - version 3.1 35
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 36 Copyright Statoil 2013 The Statoil Book - version 3.1
Operating model In each project phase, work is performed according to corporate requirements, and the following CVP arenas are mandatory: Stakeholder Start-up meeting Steering Committee Arena review The asset owner is responsible for securing a good and consistent investment decision basis in the CVP. Asset owner involvement and clearly defined roles and responsibilities are essential for project success. 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 2013 The Statoil Book - version 3.1 37
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. 38 Copyright Statoil 2013 The Statoil Book - version 3.1
Operating model Governing documentation Our governing documentation ensures standardisation and the deployment of best practice across the group. Function requirements for the function and process areas describe what we want to achieve. Process models, work flow diagrams and requirements describe how we execute activities. The owners of governing documentation handle proposals for improvements and, where relevant, provide recommendations on dispensations. Owners of governing documentation are appointed in subsidiaries which have their own management system. It is the corporate parent s obligation acting through the line to ensure that its subsidiaries implement Statoil s global governing documentation. It is the subsidiary s obligation to assess and implement such governance, to the extent possible based on legal advice. Exploration (EXPL) Process owners Petroleum technology and IOR (PETEC) Drilling and well (D&W) Project development (PD) Operation and maintenance (OM) Marketing and supply (M&S) Supply chain management (SCM) Technology development and implementation (TDI)* Business development (BD)* F Function owners Management system (MS) Safety (SF) Information technology (IT) Legal (LEG) People and organisation (PO) Finance and control (F&C) Sustainability (SU) Communication (COM) Risk management (RM)** Ethics and compliance (EC)** Facility Management (FM)** * Owners of TDI and BD governing documentation are not formally defined as process owners, but have the same responsibility for governing documentation, simplification, improvement and monitoring as described for the process owner. **These areas are not defined as corporate functions, but holds the role as function owners with ownership to corresponding functional requirements. Copyright Statoil 2013 The Statoil Book - version 3.1 39
Process owners Process owners have been appointed for the process areas with a global reach affecting large numbers of people across the organisation, to support business needs and standardisation based on best practice. Working across the organisation, process owners ensure that we achieve high operational standards and functional excellence. Process owners capture best practice and lessons learned and incorporate this into our global work processes. Process owners work across the organisation Process owners Operation and maintenance Drilling and well Exploration Business Business Business Business area area area area Petroleum technology and IOR 40 Copyright Statoil 2013 The Statoil Book - version 3.1
Operating model The role and responsibilities of the process owners Develop and improve Statoil global work processes Drive simplification and improvement initiatives across the group Monitor compliance towards Statoil s global requirements Support business areas in deployment of defined positions Establish and maintain requirements based on criticality Establish requirements to IT tools and information management Use benchmarking to drive business performance Propose improvement initiatives to business areas Facilitate continuous learning Establish risk assessment for own process area Propose monitoring activities based on criticality Conduct verifications on request from business areas Recommend deployment within process area based on scope agreed with business areas Advice on competence and capacity gaps within process area Main responsibilities Supporting roles The process owners work with local process managers in the business areas and subsidiaries to ensure alignment with business needs and local ownership of our global governing documentation and the necessary tools. Local process managers represent the link between the user organisation and the process owner function. They perform tasks in own entity based on process owner tasks. The process owner may assign responsibility for certain tasks to a local process manager. Copyright Statoil 2013 The Statoil Book - version 3.1 41
Function owners Role and responsibilities of the local process managers: represent the link between the user organisation and process owner/owner of governing documentation propose local requirements when appropriate support implementation of governing documentation ensure quality in improvement proposals handle dispensations to local requirements capture learning and ensure experience transfer Role and responsibilities of the line organisation within the process owner dimension: implements and use the governing documentation and IT tools provided for them proposes improvements to governing documentation applies for dispensations and decide on implementation and follow-up ensures that people are qualified and trained in accordance with the expertise requirements set for the roles in which they act people development and deployment establishes monitoring plan Corporate functions have the responsibility for staff and support function areas. Head of corporate functions, or an appointed function owner within the corporate function, are responsible for defining corporate policies and requirements, and for driving improvement across the company. Corporate functions will govern by publishing high-level policies and requirements, primarily through FR documents. Detailed work processes and requirements will only be published in the management system when considered necessary based on a risk and cost evaluation. Staff managers in the business areas represent the function areas in the line to ensure local ownership, and promote business needs. Staff managers for the function in the business area act as local function managers and have equivalent responsibility as local process managers. Local function managers are responsible for establishing and maintaining networks as needed. 42 Copyright Statoil 2013 The Statoil Book - version 3.1
Operating model Monitoring Monitoring is conducted to manage risk, and drive performance and learning. It ensures quality and effectiveness in how we run our business, as well as the quality of the products and services we provide. It assures compliance with the management system and provides a basis for improvement. Monitoring is performed by internal or external parties. The scope and frequency of internal monitoring depends on an Monitoring activities assessment of risks performed by line managers, function and process owners. Business areas in cooperation with corporate staff units, process owners and corporate audit, ensure that the monitoring activities are coordinated. Internal monitoring consists of three main categories: followup, verification, and internal audit. Category Purpose Characteristic Plan approved by Follow-up Assure performance within own area of responsibility Flexible and informal Tailored according to context Task owner Verification Internal audit Assure compliance with governing documentation Assure adequate management and control of the business Independent and objective assessment Structured and formalised process Line CEO and BoD audit committee Copyright Statoil 2013 The Statoil Book - version 3.1 43
Follow-up Function and process owners, line management and corporate audit have certain responsibilities related to monitoring activities. These are: Function and process owners: develop requirements and key controls perform risk assessments for own area recommend verifications perform follow-up perform verifications on request by the business areas Line management: performs risk assessments maintains monitoring plan performs follow-up performs verification Corporate audit: prepares internal audit plan performs internal audits Follow-up is performed within own area of responsibility to ensure that business strategies, plans or tasks are executed and implemented as decided. Evaluation of risks and performance related to the execution or implementation determines the approach, extent and documentation of the follow-up activity. The result is used to decide necessary actions. Examples of follow-up activities are Collect and review progress reports or KPIs Conduct performance review meetings Perform spot checks to ensure compliance with governing documentation Perform reviews of high-risk items and areas Perform arena reviews Control activities performed by controllers Process owner s review of tasks assigned to local process manager Evaluate information and trends which may indicate system deficiencies Review applicable external information 44 Copyright Statoil 2013 The Statoil Book - version 3.1
Operating model Verification Verification is the confirmation, through the provision of objective evidence, that the requirements for a specific intended use or application have been fulfilled. Examples of verification activities are Compliance verification to ensure compliance with governing documentation Verification of products and processes to ensure compliance with relevant standards and specifications Joint venture audits Verification of suppliers Internal audit Internal audit is an independent, objective assurance and consulting activity performed in accordance with international standards to evaluate and improve the effectiveness of our performance, management system and governance in accordance with the formal mandate from the board of directors. Examples of internal audits are Internal audit of entities or projects to assure that they are organised and managed appropriately and in compliance with the management system Internal audit of process areas to asses if processes adequately address risks and business needs, and is implemented, understood and complied with in relevant business areas Internal audit of activities or functions to assess if they are organised, led and managed in an adequate manner Copyright Statoil 2013 The Statoil Book - version 3.1 45
Corporate governance Corporate governance 48 Governing bodies 48 Authorities and internal control in Statoil 50
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 2013 The Statoil Book - version 3.1 47
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. 48 Copyright Statoil 2013 The Statoil Book - version 3.1
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 2013 The Statoil Book - version 3.1 49
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) 50 Copyright Statoil 2013 The Statoil Book - version 3.1
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 The corporate audit function is the independent control body responsible for monitoring our business to ensure that it is subject to adequate management and control at all times. The head of this function 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 2013 The Statoil Book - version 3.1 51
ethics committee s. Extraordinary cases related to corruption and any financial matters shall be immediately reported to the board s audit committee. The safety, sustainability and ethics committee s shall immediately receive reports about extraordinary matters related to ethics. The business integrity function in the legal entity is responsible for carrying out integrity due diligence. Decision-making authorities The board authorises the chief executive to act in accordance with the board s rules of procedure and with authorities issued in relation to individual decisions. The chief executive may delegate authorisations to other members of the CEC. They then delegate and describe relevant decision-making mandates in their own organisations. The chief executive determines the authority for decision-making and responsibility for results on the basis of the organisational mandate, other relevant authorities and the management system. All issues of major importance and issues outside a business area or corporate entity s normal field of operation must be presented to the chief executive for approval. The CFO is authorised by the chief executive to raise loans within the overall loan framework approved by the board. Line managers responsible for results and performance are also delegated a certain level of authority. Financial and people authorities are handled by the task mananger role and the resource manager role respectively. Delegation of financial authorisations and responsibilities is based on the way task responsibility is handled. Each task manager assesses which responsibilities and reporting tasks can be delegated. They can assign responsibility for executing tasks outside their own line. The delegation of authorities and responsibility for people is based on resource responsibility, which follows the line organisation. The resource manager is responsible for selecting, developing and rewarding their people. If a task manager has extensive responsibility for an individual over time, the task and resource managers may agree that the task manager assume responsibility for that person for a temporary period. 52 Copyright Statoil 2013 The Statoil Book - version 3.1
Corporate governance Governance of subsidiaries The chief procurement officer (CPO) has the authority to make commitments to individual suppliers. The CPO may assign this authority to the manager of a procurement entitiy. The principle of segregation of duties between line and procurement responsibility applies to all our procurement. The board grants power of procuration on behalf of Statoil ASA. The management of the individual business entities and staff entity is duty-bound to ensure compliance with relevant legislation and regulations. It is required to seek assistance and advice from the legal entity (and/or external guidance by agreement with the legal entity) before entering into major agreements or commitments, or when this is otherwise necessary or required. Control and management of all organisational entities is based on the same governance principles, whether the entity is organisationally a part of our parent company or an independent legal entity in the form of a wholly-owned subsidiary (wholly-owned limited liability company). In the case of partly-owned subsidiaries, the same principle applies concerning control and management of the business. Our representatives on the boards of such companies must coordinate their points of view and vote in accordance with decisions made in the line. Copyright Statoil 2013 The Statoil Book - version 3.1 53
Corporate policies Safety 56 Security 58 Sustainability 60 People 62 Communication 64 Risk management 66 Finance and control 68 Procurement 70 Ethics 72 Managing information 74
Corporate policies We have ten corporate policies which describe how we work. They guide our behaviour, actions and decisions. These policies are common to the group and to all our people. Copyright Statoil 2013 The Statoil Book - version 3.1 55
Safety Our approach We will ensure safe operations which protect people, the environment, communities and material assets. We believe that accidents can be prevented. We are committed to Integrating safety in the way we do business Improving safety performance in all our activities Demonstrating the importance of safety through hands-on leadership and behavior Openness on all safety issues and active engagement with stakeholders 56 Copyright Statoil 2013 The Statoil Book - version 3.1
Corporate policies How we work We take responsibility for the safety and security of ourselves and others We work systematically to understand and manage risk We provide our people with the necessary resources, equipment and training to deliver in accordance with their designated responsibilities We cooperate with our contractors and suppliers on the basis of mutual respect We stop unsafe acts and operations We run safety improvement processes based on surveys and risk assessments, and we involve our people in this work We build robust installations/plants and maintain them to prevent accidents If accidents occur, our emergency response organisation will do its utmost to reduce injury and loss. Saving lives is our highest priority We transform lessons learned into improved safety measures through continuous learning We aim for a safe and attractive working environment characterised by respect, trust and cooperation We monitor risk related to the working environment, and we monitor the occupational health of our people We establish work processes as well as goals and performance indicators to control, measure and improve these processes Copyright Statoil 2013 The Statoil Book - version 3.1 57
Security Our approach Security is an obligation to our personnel, our owners and the societies in which we are allowed to operate. Our business security culture is preventative and proactive in nature to manage risk. We are committed to Protecting our personnel, assets, interests and customers from the consequences of malicious activity with reasonable and realistic measures Understanding the increasingly complex security threat picture facing our business activities Utilising industry best practices and international standards in the design and implementation of security measures appropriate to the security challenges facing the business Ensuring that we are correctly informed of the identity, competence, and professional background of our employees and temporary staff 58 Copyright Statoil 2013 The Statoil Book - version 3.1
Corporate policies How we work Security measures are a line responsibility, as for other operational issues We use security risk analyses in our business processes to balance protective security with the values we want to protect We systematically assess business related security and political information We verify the background and competence of personnel in business critical positions We ensure that appropriate response mechanisms are in place to minimise the impact of any security incident We follow up security incidents to prevent recurrence and enable learning Copyright Statoil 2013 The Statoil Book - version 3.1 59
Sustainability Our approach We contribute to sustainable development through our core activities wherever we work. We use natural resources efficiently, and provide energy which supports sustainable development. We are committed to Integrating sustainability in the way we do business Contributing to the development of sustainable energy systems and technology Making decisions based on the way they affect our interests as well as the interests of the societies and the ecosystems in which we operate Respecting human rights and labour standards Ensuring anti-corruption and transparency on all sustainability issues and active engagement with stakeholders Contributing to local content by developing skills and opportunities in the societies in which we operate 60 Copyright Statoil 2013 The Statoil Book - version 3.1
Corporate policies How we work We identify and manage environmental and social risks and opportunities based on stakeholder dialogue, as well as risk and impact assessments We apply clean and efficient technologies to reduce the negative environmental impact of existing operations We work to limit greenhouse gas emissions We exchange experience with national partners and support education and skill building in oil- and gas-related disciplines to build lasting capacity We undertake sustainable social investment projects in affected communities so that they can share in the benefits provided by our activities We respect international labour standards and the rights of indigenous peoples We promote transparency through support for international industry standards, and by publishing our income, expenditures and taxes in all the countries in which we operate We hire and develop local people and promote local sourcing We ensure that local suppliers comply with applicable laws and meet our expectations and standards We work with others to help establish sustainable local enterprises and support the efforts of our suppliers to close gaps in order to meet our standards Copyright Statoil 2013 The Statoil Book - version 3.1 61
People Our approach We ensure quality in the selection and development of our people to give us the expertise we need for delivering excellent results. We are committed to Attracting and selecting the right people Providing opportunities for people to grow Encouraging our people to take responsibility for their own development Incorporating our values in everything we do Rewarding our people on the basis of their performance delivery and behaviour Creating a caring and inspiring working environment which promotes diversity 62 Copyright Statoil 2013 The Statoil Book - version 3.1
Corporate policies How we work We need people with integrity who identify with our values and are committed to teamwork, who have proven their ability to deliver, and who are able to change and learn We all need to take opportunities to develop and perform, to grow and to share. Together, we make sure that each of us has the right knowledge, skills and support to get the job done. We all teach and learn We all set clear, challenging and value-adding goals and deliver on these. We give and receive direct and continuous feedback to help us change and improve We reward and recognise delivery and behaviour equally. Performance is both what you deliver and how you behave Our rewards and recognition are designed to attract and retain the right people people who perform, change and learn We care about each other, and create a safe and healthy working environment We recognise the need for flexibility, and respect the fact that people have changing needs over the course of their careers We regard an understanding of the cultures in which we work as essential to the success of our operations around the world We believe in diversity and equality of opportunity. We prohibit discrimination and harassment in the workplace We believe that open and honest communication is essential in all aspects of our work We involve our people on business and organisational issues, and their appropriate representatives in accordance with local practice Management, our people and their representatives are jointly responsible for initiating and actively supporting and contributing to collaboration. It is essential to have a good and confidence-based relationship between our people, their representatives and our company Copyright Statoil 2013 The Statoil Book - version 3.1 63
Communication Our approach Open, honest and fact-based communication is critical to our business success. We integrate reputational risk in our decision-making processes. We act with social responsibility and communicate with quality and precision to build a strong corporate brand. We are committed to Managing our information and our brand as a corporate asset Projecting a clear vision of our group: where we want to go, what we stand for, and what we want to be known for Evaluating political and reputational risk and integrating it in business planning and investment processes Communicating with speed and accuracy, setting the agenda and driving dialogue proactively Speaking with one voice and with consistency across the organisation Strengthening our corporate culture and driving change 64 Copyright Statoil 2013 The Statoil Book - version 3.1
Corporate policies How we work We communicate honestly and never compromise on our disclosure obligations We communicate with the media through authorised spokespersons with clearly defined areas of responsibility All our external appearances are conducted with caution and we never share corporate information without the appropriate approval. That includes, but is not limited to, information on: mergers and acquisitions production volumes oil and gas reserves negotiations future revenues and other financial information We communicate internally along organisational lines of responsibility and pursue internal communication as a leadership responsibility We support the accomplishment of business objectives through communication along internal channels which can reach all our people We build our brand consistently, using an integrated brand strategy across all media channels which is applied by dedicated marketing personnel with clearly defined responsibilities We use research and insights to reduce our operational, political and reputational risk and exposure We practice government relations and public affairs in a coordinated way Copyright Statoil 2013 The Statoil Book - version 3.1 65
Risk management Our approach We identify, evaluate, and manage risk related to the value chain to support achievement of our corporate objectives. We manage risk to make sure that our operations are safe and in compliance with our requirements. We have an enterprise-wide risk management approach which means that: We are committed to Communicating and quantifying the total risk map, including upside and downside potentials, to our decision-makers Understanding our total risk and taking appropriate actions We have a focus on risk and reward at all levels in the organisation We evaluate significant risk exposure related to major commitments We manage and coordinate risk at corporate level 66 Copyright Statoil 2013 The Statoil Book - version 3.1
Corporate policies How we work We identify, evaluate, and manage operational risk to avoid undesirable incidents and to strengthen operational performance We identify risk related to strategies, targets and plans We manage risk on a short- and long-term basis, and focus on what is best for us as a group in order to avoid sub-optimisation We establish and present a risk overview as part of the decision-making process for investment projects at pre-defined milestones We manage exploration and project risk at individual and portfolio levels We use Value at Risk measures and mandates for all our trading We assign and review internal credit ratings and our global credit limits at the corporate level We insure against physical damage, business interruption and third-party liability at the corporate level, and optimise our level of self-insurance We use our business impact analyses to act on risk and ensure business continuity Our corporate risk committee assesses and discusses measures to manage the overall risks for Statoil We assess reputational consequences as part of the decision-making process We measure and adjust for country risk in large investment projects Copyright Statoil 2013 The Statoil Book - version 3.1 67
Finance and control Our approach Executing Ambition to Action to a high quality standard, including financial performance, reporting and control, is essential to the way we run our business. We are committed to Driving performance across all business dimensions. We make every effort to ensure that our group is competitive and that we fulfil our overall ambitions and strategic objectives 68 Copyright Statoil 2013 The Statoil Book - version 3.1
Corporate policies How we work We ensure that Ambition to Action is established at all relevant business levels We follow up all commercial activities at every business level We provide reliable and relevant internal and external financial information, and ensure that this is based on corporate accounting principles and reporting requirements We ensure high-quality decisions, including efficient and value-creating capital allocation The following activities are managed and optimised at the corporate level: Treasury, cash management and payment solutions Tax planning Financial asset management Financial structuring and funding at corporate and subsidiary levels We ensure that investment decisions are based on the net present value of unbiased cash flows. Relevant risk factors are described and evaluated, and form part of the decision documents We ensure high-quality financial risk management as well as efficient corporate funding and capital structuring Copyright Statoil 2013 The Statoil Book - version 3.1 69
Procurement Our approach We believe that our suppliers contribute significant value to us, and to our partners and customers. We believe that maintaining a strong relationship with high-quality suppliers will help to give us a sustainable competitive edge. We are committed to Using suppliers who operate consistently in accordance with our values, and who maintain high standards for safety, sustainability and ethics Securing the best value through optimum use of in-house and supplier resources to provide products and services with the right quality, delivered on time 70 Copyright Statoil 2013 The Statoil Book - version 3.1
Corporate policies How we work We ensure that supply chain management is tightly integrated in the planning, execution and follow-up of projects and operations We develop, integrate and implement sourcing strategies to achieve the best contracts for the benefit of our group through a category approach to goods and services, based on aggregated demand management, the global market position and robust analysis to minimise execution risk We incorporate the effects of country-specific requirements for supplier development and collaboration when considering new commercial developments We operate in accordance with the principle of segregation of duties, compliance and control principles, which means: Line management is responsible for planning demand, allocating technical and operational expertise and approving recommended suppliers Procurement entities are responsible for coordinating proactive demand, planning and executing procurement on behalf of line management, and committing us in relation to the supplier in accordance with the authority delegated from the chief procurement officer (CPO) We base procurement on competitive bidding and the principles of transparency, non-discrimination and equal treatment of bidders We support cost-effective procurement through simple and standardised tools, systems and work processes to ensure quality, efficiency, spending transparency and appropriate automation Copyright Statoil 2013 The Statoil Book - version 3.1 71
Ethics Our approach We believe that ethical conduct is a necessary condition for sustainable business. We are committed to Implementing our business activities in an ethical and transparent manner Acting comfortably within our ethical standards and within the law Requiring high ethical standards of our people and everyone who acts on our behalf 72 Copyright Statoil 2013 The Statoil Book - version 3.1
Corporate policies How we work We treat ethics as an integrated part of our business activities We work systematically to understand and manage risk related to ethics We have leaders who demonstrate ownership to our ethical standards by what they say and do We comply with applicable laws and regulations in all our markets We are open in dealing with ethical issues related to our business and address ethical concerns or dilemmas immediately with line management, relevant internal entities or through the ethics helpline We run an ethics helpline to ensure that ethical concerns can be raised We create awareness on ethics through regular training and communication We work in a systematic manner to ensure compliance We consider taking disciplinary action in response to breaches of our ethical standards We manage risk through in-depth knowledge of our suppliers, partners and markets We expect our suppliers and partners to have high ethical standards We work with government organisations, industry associations, civil society and business associates to develop best practice We have established ethics committees to ensure discussions and transfer of experience We spend sufficient time deciding on difficult ethical questions Copyright Statoil 2013 The Statoil Book - version 3.1 73
Managing information Our approach We manage information as a key corporate asset We are committed to Prioritising the management of business critical information Managing information in accordance with risk exposure Sharing information to ensure efficient use and experience transfer Making information available for future needs How we work We understand requirements and responsibilities for managing information We use, store and archive information in accordance with legal requirements, as well as operational, financial and historical needs We manage and share information according to security classification We ensure that information ownership is clearly defined We use verified sources and approved storage systems Ensuring information quality 74 Copyright Statoil 2013 The Statoil Book - version 3.1
Crossing energy frontiers
The Statoil Book - version 3.1