Norway’s force in the oil world

Offshoring: Helge Lund has turned Statoil into a world leader

Helge Lund is almost the antithesis of the classic oil man. In a world of cigar-chomping wildcatters, roughnecks and roustabouts, the head of Statoil, the state-controlled Norwegian oil group, has the air of a management consultant – perhaps not surprisingly, considering he once worked for McKinsey.

He also stands out for his somewhat philosophical take on the industry. What gets him out of bed in the morning, he says, is “not the performance of Statoil’s share price” but the need to “contribute to the wider society”. Energy, he says, “has a huge role to play in bringing people out of poverty”.

But Mr Lund’s seemingly altruistic take on business masks a fierce ambition. Since taking the reins of Statoil eight years ago, he has been on a mission to turn a business that was once barely known outside Norway into a truly global company.

That dream was vindicated in May when Statoil won one of the most coveted prizes of the international oil industry – an entry ticket to the Russian Arctic.

In a landmark deal signed in Moscow, Statoil and Rosneft, Russia’s state-run oil company, agreed to drill together in an area the size of Portugal that is thought to contain billions of barrels of oil.

Negotiators from both companies spent 10 days working round the clock to hammer out the agreement. But it would never have happened without the “years and years spent building up relationships in Russia”, Mr Lund says – a period during which Statoil succeeded in persuading the Kremlin that Russia and Norway could be natural partners on complex offshore developments. “It’s a perfect match: we have the technology and they have the resource,” he says.

The sheer size of the tie-up highlights the scale of Statoil’s aspirations. With a market capitalisation of $77bn, the company has emerged as a world leader at extracting oil in the deep waters of the world’s oceans and in the remote, freezing wastes of the Arctic.

Many credit Mr Lund for its huge international expansion of the past few years. “Statoil was a sleeping giant when Helge came,” says one former executive. “He woke it up.”

Born near Oslo in 1962, Mr Lund is the son of a psychiatrist father and a headmistress mother who, he says, instilled a tough work ethic in all five of their children.

The CV

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Born: 1962, near Oslo
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Education: 1983-1987 MA in business economics from the Norwegian School of Economics and Business Administration, Bergen 1990-1991
MBA at Insead

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Career:

1988-1990 political adviser, the Conservative party’s parliamentary group, Norway

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1991-1993 management consultant, McKinsey

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1993-1999 various leadership positions at Hafslund Nycomed/ Nycomed Pharma
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1999-2002 executive vice-president, Aker RGI

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2002-2004 president and chief executive of Kværner, later AkerKvaerner

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2004 president and chief executive, Statoil

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External offices: member of the board of directors, Nokia
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Family: two children – a son aged 17 and a daughter aged 19
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Interests: likes running and football – supports Arsenal

Every Saturday morning his mother would draw up a list of 20 chores and the child who slept in the longest was given the worst one – usually cleaning the toilet.

But his main contribution was culinary. “I baked the best bread in the family,” he says.

A keen football player all his life, he has been an ardent Arsenal fan since the age of nine, ever since their “fantastic 1971 season”. Soft-spoken and low-key, Mr Lund prefers running in the forests outside Oslo or reading a book on global politics to “fox-hunting with bankers”, he says.

Sport for him is not just a pastime but a way of seeing the world. “The best athletes are the ones who are most curious, most willing to learn from others,” he says.

It is the same in business: “The most important thing is to avoid complacency, to always be curious.”

Mr Lund came to Statoil after stints at Hafslund Nycomed, the pharmaceutical and energy company, which later became part of GE Health, and Aker Maritime, the shipping company, overseeing its merger with Kvaerner Oil and Gas in 2002.

When he joined the state oil company in 2004, it was in turmoil. Statoil’s chairman and chief executive had been forced to resign after it was revealed that managers had paid bribes to secure lucrative oil contracts in Iran – a sign, Mr Lund says, of “how inexperienced [the company] was at working abroad”.

In fact, the top job at Statoil must have seemed like a poisoned chalice. Since the late 1980s, two other chief executives had left under a cloud, forced to quit over huge cost overruns at prestige projects.

Mr Lund seems to have cleaned things up. Under a new “values-based” performance system, managers were to be judged by how transparent, courageous and open they were, not only on how much they boosted profits and production.

That, says Mr Lund, was a necessary shift in a world where oil companies were being held to higher standards than ever before. “Energy companies are working on resources that belong to nations – so it’s fundamentally important that those countries trust our operations,” he says. “The call for transparency, openness and integrity is just increasing.”

Nowhere is that more obvious than in the goldfish bowl of Norway. “We’re under very tough scrutiny [there] – from the media, the public and NGOs,” says Mr Lund. “Norwegian people feel they own Statoil” – after all, the government still has a
65 per cent stake in the company.

That sense of ownership means Statoil is frequently under attack in its own backyard. Environmentalists are aggrieved about its oil-sands investments in Canada, where extraction is considered more polluting and carbon-intensive than for conventional crude.

They also worry about its interests in US unconventional gas, amid growing disquiet about hydraulic fracturing, or “fracking”, the technique used to release gas from dense shale rock by blasting it with huge volumes of water and chemicals.

Mr Lund has sought to disarm the detractors with his trademark openness – for example, disclosing the composition of the chemicals Statoil uses in its fracking operations.

Investors have generally been supportive of Statoil’s strategy. With most oil companies struggling to increase production and replenish reserves, Statoil in May announced an 11 per cent jump in output and its highest-ever quarterly profit.

As one of Norway’s best-known businessmen and the head of its biggest company, there has been speculation Mr Lund may leave the oil patch altogether one day for politics. He has previously worked as an adviser to the former Norwegian prime minister Kare Willoch, and according to one former colleague, he continues quietly to nurture political aspirations.

Not everything always goes his way, however. He confesses that he had hoped to steal a pen from the Moscow signing ceremony that sealed the agreement with Rosneft as a present for his head of exploration, Tim Dodson, who had worked round the clock to finalise the deal.

It was harder than he expected. “The pen and its holder turned out to be so grand that they were part of the furniture,” he laughs.