Competitiveness through innovation and new technology - Odd Instefjord StatoilHydro Kazakhstan

ASTANA. March 5. KAZINFORM /Rizvana Sadykova/ There is a growing interest in Kazakhstan as one of the fastest developing countries in the region and more international and foreign companies show interest in this biggest country of Central Asia. As a part of series publications about foreign business development and financial institutions we offer readers an interview about the world leading company in the field of oil and gas - Norwegian StatoilHydro. Our guest today is Odd Magne Instefjord, Director General, StatoilHydro Kazakhstan.

Could you please give us a brief introduction about StatoilHydro and its activities in Kazakhstan? Do you find it challenging to operate in such ever growing competitive environment? The oil and gas environment in Kazakhstan, as in the rest of the world, is getting more competitive which is of benefit to your country. StatoilHydro?s history in Kazakhstan goes back to 1992 when Statoil came to Kazakhstan in Alliance with BP. We got a small share in East Kashagan discovery which was later sold. In May 2004 Statoil opened a new office in Kazakhstan thus demonstrating a clear ambition to become a player with a long-term perspective in Kazakhstan. StatoilHydro was established on 1st October 2007 following the merger between the two Norwegian companies. An emerged company with 31 000 employees in 40 countries and it is among the world?s 50 largest listed companies. StatoiHydro is the world?s third largest net seller of crude oil, one of the world? s biggest gas suppliers and the dominant seller of oil products in Scandinavia. It?s a listed company with Norwegian state being a major shareholder of 67%. The company is the world?s largest operator of deepwater fields and is the world leader in the use of deepwater subsea technology with experience from developing and operating major oil projects in exploration and production as well as transportation. StatoilHydro has built and operates some 6000 kilometers of subsea pipelines. Our primary competitive lever is our open, transparent corporate culture with integrity, where people and leadership development and the ability to cooperate are key parameters for success. We believe our technological expertise and experience which, in the light of current and future developments of the North Caspian, can be of interest to Kazakhstan. Historically, StatoilHydro developed its competitiveness very much through innovation in terms of the development and application of new technology, to some extent driven by the harsh offshore environment of the Norwegian Continental Shelf. And our heritage as a national oil company should have a value. StatoilHydro in itself is like a combination of an international oil company and national oil company with good understanding of what it takes to go through this development. That?s an important part of our heritage. It is a blend of these three parameters that defines our competitiveness worldwide and in Kazakhstan. In the recent times local content issues has become one of the top agenda topics in Kazakhstan, and in particular ways of increasing the local content part of the investments done within the Oil and gas sector? Relevant to your industry how do you assess labor market in Kazakhstan? What are you doing in order to overcome some shortage of qualified personnel here? In order to cope with the above short term challenge, I do hope that Kazakh authorities will utilize the strength of the International Oil Companies already present in the country, together with the larger Service companies and jointly find ways of meeting the national challenge of providing local content at a quality and cost which we all may benefit from. This is something I recognize from my home country Norway as utterly important. I sincerely hope that Kazakhstan finds a good way of meeting the challenge of seeing activities from the Oil and gas sector being undertaken by local companies, utilizing local Kazakh labor. It is indeed a difficult time to balance between quality requirements, required cost focus and protectionism. In Norway the authority?s focus was on making the continental shelf attractive, inviting foreign companies to the country and join forces with local industry. This was stimulated by different incentives. The main point was to see activities taking place on Norwegian ground, not so much the ownership. This led to a situation where international suppliers moved to Norway and started to employ Norwegian. Norway never imposed restrictions on buying foreign goods and services although the Petroleum law said in the early days that if two bids received were equal in price the local one should be given preference. This clause was later removed from the Petroleum law and it is clearly competition that rules. I believe that the main reason for having so many Norwegian suppliers being in the forefront within their field world-wide is that they have invested in people, in training and development of individuals and challenged the organization in the competitive environment. Since we haven?t started yet to implement significant industrial projects in Kazakhstan, StatoilHydro has employed only administrative staff in the Astana office. But I can see that Kazakhstan government undertakes serious measures to improve on education and research, and in recent times the focus is made to vocational training which to me is a very important and timely step since the importance of qualified vocational labor force in oil and gas operations can hardly be overestimated. And in that respect Norway has already demonstrated and shared some of its experience through the cooperation between Nursultan Nazarbayev?s Educational Foundation (NNEF) and the Norwegian company Rogaland Training and Education Center (RKK). The Aktau training center will very soon start to train professional oil and gas workers in Aktau. This project is the result of cooperation between NNEF, the Akimat of Mangistau region and RKK. StatoilHydro support such activities. I believe the future winners are the companies which make their employees competitive. StatoilHydro is very focused on building strong employer brand. We focus on being attractive to talented people. This requires strong systems in place and capabilities related to people and leadership development. More than ever, it is critical to have a very clear development strategy for those individuals you bring in. This industry requires skilled workers at all level. We need cleaners, welders, engineers, economists, geologists and professors. Fruits from educating young people to day will be harvested 5 to 10 years from now and onwards. As you may know we have collected our oil revenue in National Fund. recently, part of its assets was useed for the establishment of National Welfare Fund SamrukKazyna. It would be of great interest to our readers find more about the Norwegian Pension Fund which is the biggest one in the world made from petroleum revenues. In fact, large petroleum revenues have resulted in substantial financial assets in the Government Pension Fund. The purpose of the Government Pension Fund is to facilitate government savings necessary to meet the rapid rise in public pension expenditures in the coming years, and to support a long-term management of petroleum revenues. As of the valuation in October 2008, it is the largest pension fund in Europe and the second largest in the world. The official name of the Fund is the Government Pension Fund established in 2006 consisting of two parts: "The Government Pension Fund - Global", which is a continuation of the Petroleum Fund, and "The Government Pension Fund - Norway", which was previously known as the National Insurance Scheme Fund. Due to the large size of the fund there have been some discussions dominated by three main issues: Whether the country should use more of the petroleum revenues for the state budget instead of saving the funds for the future. The main matter of debate is to what degree increased government spending will increase inflation. Whether the high level of exposure (around 60% in 2008) to the highly volatile, and therefore risky, stock market is financially safe. Whether the investment policy of the Petroleum Fund is ethical. In order not to stimulate corruption and unethical behavior the special board named the Council on Ethics for this fund was created. The Council provides an evaluation of whether investments in specified companies are inconsistent with the ethical guidelines where the Ministry of Finance makes the decision on exclusion of companies from the Fund's investment universe based on recommendations of the Council. On behalf of our young readers, who have just started their professional life, would you tell us about your career and family? How do you find to live in Kazakhstan? I was born and raised on the west coast of Norway where first oil was found in 1969. I hold a Bachelor degree in Civil engineering and construction and an MSc in Economic Intelligence and Management of Complex Projects. For some reason, I have always had an interest of international industrial activities and local content challenges. I believe this is because I have seen the results from my previous experience, that wrong frame conditions often leads to negative results, not only for the local population, but also for the industry and the country as a whole. We ought to develop cooperating patterns were we all benefit. To me that is about building trust between the parties involved. I am happily married for 35 years and have three sons who now are grown ups with their own families, I have three grandchildren and I have already started telling them about trust between people and good relationship. My wife Margareth has moved together with me to Astana in January this year. We very much enjoy outdoor life and usually spend vacation in Norwegian mountains of Northern Norway where we have a summer house. But now we will certainly take the opportunity and explore Kazakhstan?s beautiful nature ranging from exotic flatland around Astana to high mountains in Almaty or towards China. And of course we will visit Aktau and Atyrau to observe the booming oil industry. We are, after all, here to contribute to Kazakhstan?s success in this area. Finally, I must say that we were greatly surprised by hospitality and friendliness of the Kazakh people, their international traditions. Taking this opportunity I want to congratulate all the women of Kazakhstan with upcoming International Woman?s day holiday and wish them all the best of luck for the future, good health and prosperity.