Statoil Boosted Procurements in 2006

Operator Statoil purchased goods and services worth NOK 67.7 billion in 2006. Norwegian companies represented about 78% of these deliveries.

"Last year's expenditure is 9% higher than in 2005, which reflects the group's intense activity both on the Norwegian continental shelf (NCS) and internationally," said Kjell-Erik Ostdahl, Statoil's chief procurement officer. "We have made sensible and forward-looking investments in 2006."

In recent years, companies with Norwegian invoicing addresses have stood for an ever-increasing share of deliveries. Compared with 2006 figures, Norwegian companies represented 74% of deliveries in 2005 and 72% in 2004.

"This demonstrates that Norwegian industry is competitive and that Statoil's activities create spin-offs for society," said Ostdahl.

Aker Kvaerner Stord was the biggest supplier last year, followed by Vetco Aibel, FMC Technologies, Aker Kvaerner Offshore Partner and Acergy.

The largest share of the NOK 67.7 billion was spent on construction and modification work (25%). Maintenance, repairs and operations represented 20%, and 18% was spent on drilling and seismic. Every seventh krone was spent on the Snohvit project in northern Norway last year.

Ostdhal expects that Statoil will buy goods and services for a similar figure in 2007.

"The Snohvit field will come on stream in the autumn and consequently there will be a fall in deliveries for development projects," he said. "We nonetheless expect a high level of procurements next year because of an increase in drilling and well activities, as well as ever increasing maintenance and upgrading of existing infrastructure."

In 2009 project deliveries will increase once again. Several development projects have been agreed, including Gjoa in the North Sea and Tyrihans in the Norwegian Sea.

"This year we'll experience the effect of inflation more than in 2006," said Ostdahl. "But despite the large price increase last year, we have managed to control cost increases. We have coordinated procurement activities across the group."

An improved coordination of procurement activities is one of the measures in the best practice in procurement (BPP) corporate initiative. The initiative will also help Statoil secure access to competitive prices.

"We anticipate that the market will remain tight, both on the NCS and internationally," Ostdhal concluded.

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