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Interview

with Aasmund Erlandsen, Managing Director, Transocean (NORWAY)

28.09.2009 / Energyboardroom

Since Norway is one of the biggest offshore markets and you are the world’s largest offshore contractor, what is the importance of Norway for the Transocean group?

Our Stavanger-based operations represent one of nine divisions that make up Transocean. It covers Norway, Sweden and the Baltic countries. Transocean has been in Norway in one form or another for four decades. While our Norway team is the smallest of the Transocean divisions, nevertheless we do contribute quite a bit to our company’s results by delivering safe, efficient and effective drilling for our clients.

In our interview with Mr. Lenning, of Odfjell drilling he said that the competition in Norway did nearly not exist now because Transocean acquires all of the competition. What is the strategy of acquisition and how will this look in the future?

It is important to note that currently, there are 11 offshore drilling contractors in Norway, including Transocean. Our corporate office has the overall strategy in mind; although it goes both ways. If we see opportunities here in Norway, we communicate that.

As the expert in Norway, how will the recent elections impact Transocean in Norway?

The election will not impact Transocean directly. However the key for us and the oil industry will be that offshore activity remains high. As it is right now, production is declining. Fortunately, there are areas that remain to be explored, such as in the Barents Sea and other areas not opened for exploration which may be important for future activity.

How would you respond to statements that have been made saying that production in the UKCS is decreasing while Norway still has a few years to go before seeing this same sort of decrease?

That is a matter of ”age.” Norwegian crude oil output peaked in 2001 at 3.4 million barrels a day and has declined since then. The NPD believes oil production could contract almost 10% in 2009, representing the ninth year of lower output. In the United Kingdom, production peaked in 1999 at 4.5 million barrels per day, and that amount is expected to fall to 1.4 million barrels a day in 2009. So, Norway peaked two years later than the U.K. and has declined at a much slower pace because Norwegian production efforts have been managed by the NPD, which imposes strict production-recovery targets on license holders. In addition, there have been discoveries by larger oil companies which may further support production in Norway.

To come back to the frontier areas that could be opened, both Riis-Johansen and Helge Lund have expressed a desire and necessity to open up the new frontiers. What is Transocean’s policy towards exploration there?

Transocean would welcome working with our clients in exploring these frontier areas. We have a lot of experience and an excellent record of environmental protection in sensitive frontier areas. For example, we have shown on the Polar Pioneer in the Barents Sea that these results are achievable.

What is the strategy toward working with multinational companies and how does it compare to your strategy towards the newcomers to the industry?

The government has initiated tax schemes that have increased exploration activity and attracted newcomers to the Norwegian Continental Shelf in recent years. Also, the 20th licensing round in April 2009 saw a record 34 companies awarded stakes in 21 new oil and gas licenses. Statoil is the major player but approximately half of the exploration wells in 2009 will be drilled by these newcomers, so they are playing an important role, too. This is similarly reflected in our portfolio as well. Transocean in Norway has four rigs with StatoilHydro and one with a consortium of smaller companies.

Given that you have a good relationship with StatoilHydro here in Norway, what is Transocean’s relationship with StatoilHydro on an international level?

Transocean has a very good relationship with StatoilHydro here in Norway, and our focus is always customer satisfaction everywhere in the world. This is recognized by StatoilHydro here and abroad, but our part is to deliver the safest and best offshore drilling services. A testament to our good international relationship are the collaborative efforts that resulted in the newbuild contract for the ultradeepwater “Enhanced Enterprise” class drillship, the Discoverer Americas. She is currently mobilizing to the U.S. Gulf of Mexico to begin a program for StatoilHydro under a four-year contract.

Concerning HSE, you were quoted as saying the: “Norway division is on the right path, but we still have a lot to do. We know the challenges, but should never give up on continued compliance to our procedures and accountabilities.” What are the challenges that Norway faces now, and what should you in order to not ‘relax’?

We have improved a lot. We are continuously improving our performance and the focus on safety pays off. We have a record low “total recordable incident rate” which is a way of measuring safety based on incidents. This year has been the best we’ve ever had in Norway, so that’s encouraging. Safety is so important to our success. Even though we have seen a fantastic shift in our safety, it’s all about managing risk, so we have to stick with our procedures, and our people offshore have to be aware and have to comply. The oil industry has come a long way and compared to other industries I think we are ahead in safety. I am very glad that we have come this far, but our goal is zero incidents of any kind. We believe our vision of “incident free operations, all the time, everywhere” is not only achievable but fully compatible with the very strong HSE focus in the Norwegian environment. Even though this year we’ve only had one recordable incident between our five rigs, it’s still one – it’s not zero. We can never “relax” efforts in HSE matters: it is an everyday battle.

Norway is very strong on HSE, so how has Transocean adapted its already high standards to the Norwegian environment?

The Norwegian regulations are strict compared to other countries. However, Transocean has a very strong safety culture and the fact that our vision is to have zero incidents everyday and everywhere, means that there is already a high focus on the procedures and how our employees act. When it comes to safety, we learn from each other. From the industry, we can learn. In the rig business we benchmark against each other. We see that from time to time someone presents better marks than we do and we can learn from them.

What has Transocean done then, to not only turn around HSE within the company, but on the Norwegian level as well?

We have empowered the employees to look after themselves and their teammates. We have simple safety policies and procedures which helps in looking after the safety of the rig, the crew and the company overall. We firmly believe in leadership, compliance and accountability regarding HSE. Strong visible leadership that walks the talk, sets behaviors and standards for others to follow. Strict compliance regards all our policies and procedures with a strong focus on fully utilizing our key risk management processes.

I saw that the CEO of the Transocean Company was quoted as being optimistic about the future of the company despite the financial crisis, what is your outlook here, as Managing Director of Transocean Norway?

We have a good backlog. We still have a good horizon with our rigs; they will all be occupied for a long time. Our outlook is very good.

To contribute to this “very good” outlook, what would be your dream project be?

If the oil companies make a huge discovery or discoveries in the unopened areas we of course would like to supply rigs there in the long term.

Until they make these new discoveries, what would your vision be for the next three to five years? Where do you want to bring the company?

It is dependent on the oil companies, but looking at the unexplored areas on the NCS there is still so much to look for here in Norway. There is still a large part of the NCS that is unexplored, which leaves us with many possibilities in the long run, and the potential for expansion. Internally we have some goals for expansion, but for now it is hard to say in terms of exact number of rigs.

For this expansion you will need manpower. How do you attract and retain the best employees?

As a company, we focus on customer satisfaction and that serving attitude brings good results, and when you have good results, everyone feels that they are part of a winning team. Transocean is focused on results and that goes for a lot of things we measure. When we meet our goals, that gives pride to our people and as management it is our responsibility to make the workplace a good place to work through various initiatives. Salary is important, but it’s not the only factor. If people have a workplace in which they feel good about contributing, where they work with competent colleagues to bring great results — that is something that spreads in the market to build up brand name. Transocean has a good reputation and a good brand name within Norway. Certainly being part of an internationally renowned organization is also an opportunity. Through delivering results and having satisfied employees, the word will continue to spread: Transocean is a great place to work for.

On behalf of Transocean here in Norway, what would be the final message you would like to spread to the Oil & Gas Financial Journal readers around the world?

Transocean is a large, multinational company on the forefront of technology. Transocean has a sound basis for expansion, financial strength and we are set for taking opportunities that may come. We have been here for many years and we have a long term commitment to staying in Norway and operating responsibly.

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