StatoilHydro calls for cost savings in downturn

Operators must prioritize their projects and could save money in executing them because of falling service prices, said Gunnar Myreboe, StatoilHydro executive vice-president for projects.

Uchenna Izundu
OGJ International Editor

LONDON, Feb. 16 -- Operators must prioritize their projects and could save money in executing them because of falling service prices, said Gunnar Myreboe, StatoilHydro executive vice-president for projects.

Speaking earlier this week at the Offshore Strategy Conference in Stavanger, Myreboe said the quality of projects could improve in this climate.

"By shifting down a gear and being more selective, we will experience a renaissance in the quality of projects. We are also experiencing great understanding on the part of suppliers for consolidation." He stressed that every project must be reviewed to ensure its profitability.

With 2008 high oil prices and rising demand for oil, driven by China and India, operators' costs greatly increased. Last year, StatoilHydro spent 123.3 billion kroner on goods and services, which was a 17% increase over 2007.

"That is an increase of almost 84% of the total deliveries of goods and services that came from Norwegian industry, while 16% came from international suppliers," said StatoilHydro.

"This shows that Norwegian industry is highly competitive," Myreboe added.

The company can face the challenges in the market because it has a strong industrial and financial base.

"We must challenge the supplier industry on prices, efficiency, and productivity, and it is also important to have updated contract strategies," said Myreboe. In his opinion, the biggest challenge was balancing short-term financial flexibility with the long-term strategy.

Contact Uchenna Izundu at uchennai@pennwell.com.

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