The purpose of country risk assessments is to develop robust knowledge and an understanding of local conditions and business culture as early in the business process as possible.

This enables Statoil to reduce its country risk exposure through early identification, prioritisation and mitigation of significant risk elements that could have a negative impact on a given business opportunity. Risk assessments are carried out and updated as part of the basis for making decisions at each decision gate and during the operating and abandonment phases of projects in medium- and high-risk countries.

The evaluation of country risk is an integral part of the decision-making process. It is subject to specific requirements and active follow-up from involved management. The risk identification process makes use of country risk workshops at which a multi-disciplinary group from relevant parts of the organisation can brainstorm, filter and prioritise risk elements in relation to 13 pre-defined risk areas. The possible reputational impact for the company is also considered. In 2011, we held eight country risk workshops for medium- and high-risk countries, prepared country risk reports for an additional 10 countries and organised seven country forums on particularly relevant risk themes for various internal stakeholders.

In addition to this qualitative analysis, projects in medium-to-high-risk countries are assessed for country risk effects on their net present value. Using a model developed using IHS Global Insight, endeavours are made to estimate which risks have the potentially largest effect on the cash flow of a project and thereby to enable mitigation of these risks.

Statoil and the Arab spring

In Libya, Statoil closed its office in the capital city of Tripoli during the uprising due to security reasons. All our employees in the country were well accounted for and we kept contact on a regular basis. We are presently in the process of safely ramping up production.  Statoil holds a 12.5% interest in Mabruk and a 10% interest in Murzuq.  Mabruk is operated by Mabruk Oil Operating Company with Total as lead second party and Murzuq is operated by Akakus with Repsol as lead second party.

In Egypt, we have relinquished our two deep-water exploration licences, El Dabaa and Ras el Hekma, but continue to pursue business opportunities in Egypt, including exploration. The staff has been reduced to match the present business scenario.