Implementing Beyond Budgeting: Unlocking the Performance Potential by Bjarte Bogsnes

Author:Bjarte Bogsnes
Language: eng
Format: azw3
ISBN: 9781119222279
Publisher: Wiley
Published: 2016-06-30T17:00:00+00:00

CHAPTER 4

The Statoil Case

“The way we deliver is just as important as what we deliver.”

The Statoil Book

Introduction

Sharing the Statoil case is quite different from sharing the Borealis case. First time around compared to getting the chance a second time makes a big difference. I am very grateful for that opportunity. The Statoil journey actually made me understand the Borealis journey better: what we did, what we didn't do, and what we could have done differently. Back then, there was no Beyond Budgeting guidance to help us put things in perspective.

The Borealis days are long enough behind to allow for the necessary reflection and learning. The Statoil case is still a work in progress. Although we have been on our Beyond Budgeting journey for more than ten years now, we still are as I write and probably also as you read.

Statoil was established in 1972 as a national oil company following the discovery of significant oil and gas reserves on the Norwegian continental shelf in the late 1960s. Norway is among the very few countries in the world where huge natural resources have been a blessing and not a curse. Even the Dutch messed it up when the country discovered big gas reserves many years ago. Wise Norwegian politicians have not only secured a fair distribution of the new wealth, they have also resisted the temptation to spend it all. The Government Pension Fund now has close to one trillion dollars invested around the world, almost USD 200,000 per Norwegian.

Statoil hit the ground running and grew fast during the 1970s and 1980s. International activities were turbocharged through an alliance with BP in the 1990s. In 2001 the company went public with a listing in New York and Oslo, although the state kept a majority shareholding. Statoil quickly became an attractive investment due to a track record of combined growth and profitability.

In 2007 Statoil merged with the oil and gas division of Hydro, a Norwegian competitor. The new company was named StatoilHydro to underline that this was meant to be a merger of equals, although Hydro's oil and gas business was much smaller. The name was also meant to defuse a potentially heated discussion. After a few years it was quietly changed back to Statoil without much reaction from ex-Hydro employees, a great confirmation that the merger had been a success.

Statoil is today Scandinavia's largest company with more than 20,000 employees in well above 30 countries across the world (Exhibit 4.1). Turnover and market cap is around $100 billion, varying of course with the oil price. The company is the world's largest offshore operator, the second largest gas supplier to Europe, and a leading international oil marketer. Statoil is also involved in renewable energy, mainly through offshore windmills where we can build on our offshore competence.

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