B. L HANSEN Hydro Oil & Energy

The Barents Sea offers huge potential for oil and gas activities. Since May 2003 Hydro has been actively working with the "Supplier Development Project in North-west Russia" focusing on assisting potential Russian local suppliers to start early preparations for participation in the forthcoming development of large-scale oil and gas projects in this region.

Hydro's initiative is a direct response to the energy cooperation called for in the Joint Declaration signed by the Russian President Putin and the Norwegian Prime Minister Bondevik in November 2002.

The company has got considerable support and practical assistance from the regional administrations in Arkhangelsk and Murmansk, oil and gas companies Sevmorneftegaz, Gazprom and Rosneft, the Finnmark County, Innovation Norway, the Barents Secretariat and SOT Varanger commune in Norway. Hydro's Norwegian partners in the execution of the project are industrial group Aker Kvaerner, consulting company Storvik & Co. and international Joint Qualification System Achilles.

Hydro's experience from the Norwegian continental shelf is of high relevance to future oil and gas activities offshore North-west Russia, as the two regions feature several common characteristics. Hydro is known in the international industry for high offshore and subsea competence and also for being very professional at managing large-scale complex projects, keeping them on budget and schedule. The subsea development of the Omien Lange gasfield carried by Hydro in the North Sea can become a laboratory for testing and perfecting technologies that can be later adapted to the Shtokman gasfield in the Barents Sea.

Hydro is offering advice based on its knowledge and experience to Russian companies wishing to qualify as suppliers and is also helping to establish partnerships between supplier companies in Russia and Norway.

Many of the local companies in the North-west Russia have developed strong manufacturing skills as suppliers to the Russian navy and the fishing industry. This may give local suppliers a competitive advantage when oil and gas projects in the region are being developed, but there is a need for competence development and familiarisation with the requirements of the offshore oil and gas industry.

Hydro started the project with thorough mapping of all relevant companies in Arkhangelsk and Murmansk regions. The company used pre-qualification questionnaires of the international supplier register Achilles. Detailed gap analysis and the established database containing over 50 companies were main results of the project's first phase. Hydro identified clear need for improvements within project management, quality management, certification and implementation of HSE (Health. Safety, Environment) systems in compliance with the proven international practice.

In April 2004 Hydro entered the second phase with a focus on feedback and advice, basic competence development among the potential suppliers, more detailed assessment of 13 selected companies and international partner search for the Russian companies. In addition to that Hydro is considering establishment of a regional supplier competence development centre. The first ever qualification and registration of four Russian local companies (from Arkhangelsk, Severodvinsk. Monchregorsk and Murmansk) in the international Joint Qualification System Achilles is one of the sound results of the second phase. These companies are formally qualified to participate in Norwegian oil and gas projects. The qualification process, training in use of the system and registration fees were sponsored by Hydro.

At present the company is already planning the Phase П1 which has a working name "SUPPLIER DEVELOPMENT PROGRAM" and is intending to invite Russian oil and gas companies, authorities and major industrial companies to cooperation aimed at implementation of the program.
Hydro realises that it has to get the suppler development activities going ahead of time and considers this project as highly prioritised both in terms of attention from the top-level management and allocated to these purposes resources. Hydro is sure that it is a social responsibility of an oil and gas company to inform local society, industry about plans for future oil and gas projects in the region, and to assist them in preparing to take active part in such development.

Hydro considers Russia as one of its future core areas for its oil and gas business.

The company has been present with an office in Moscow for more than 15 year