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Cross-border organization on the Norwegian shelf - consequences for health, safety and environment

The Petroleum Safety Authority Norway (PSA) has prepared a technical report on the basis of audits targeting four operating companies on the Norwegian shelf. The objective has been to obtain more knowledge about why and how international companies have elected to organize their activities, and the consequences this can have for health, safety and environment.

The audit was conducted in relation to BP Norge, ConocoPhillips, ExxonMobil and Norske Shell in February/March 2007.

A central issue has been the preconditions, needs, strategies and goals that form the basis for the companies' choices as regards organization and formulation of roles and responsibilities.

We have also examined how the companies have assured themselves that local management-related preconditions, including regulatory requirements, guidelines from Storting White Papers and multilateral cooperation and participation, etc. have been incorporated as part of the company's policy in the cross-border business unit.

The report comprises an anonymized summary of the main observations.

Many large international operating and contractor companies have, with varying motivations, established so-called "cross-border business units"/regional headquarters.

Different types of needs can form the basis for such an organization, such as the need for specialization, requirements for efficient and flexible use of resources across national borders, as well as introduction and use of new technology and integrated work processes that can support centralized decision and operations functions.

The division of work between the various local/national organizational units and the parent company, how decision-making, planning and operations functions are organized and followed up through various reporting and follow-up systems, as well as application of global contracts, are factors which are very interesting to study in light of national framework conditions for activities on the Norwegian shelf.

Common features
Cross-border business units are characterized by a combination of national operative responsibility (including HSE) and cross-border cooperation, transfer of experience and knowledge development. The national operative responsibility lies with a national business unit.

The operations organizations are, with one exception, linked to the respective licenses co-located with the national administrative headquarters. Operative decision-making authority and responsibility lies with the national unit. In this respect, the new organization form does not represent a change.

The most important changes that follow from cross-border organizations are largely linked to the exploitation of functional expertise and cooperation in new organization forms. This further entails that core personnel functionally report across national borders in a regional context, so that the companies have more flexibility in exploiting their resources within a region.

Core personnel are given greater autonomy in their roles in order to support the various organizational units with the necessary expertise.

The management functions in the national units have both national and international responsibilities. The primary regional responsibility for various functions can be found both inside and outside of Norway.

Regulatory comprehension
The report discusses several actual and potential challenges associated with cross-border organization of the activities. At the same time, the report confirms that international companies operating on the Norwegian shelf generally emerge as being professional in terms of how they safeguard local regulatory requirements in their approach to regionalization.

All of the companies that participated in the audit are clearly aware of their responsibility in relation to Norwegian HSE regulations and the ground rules in Norwegian working life. The audit did not reveal specific ambiguities as regards how the Norwegian HSE regulations are handled. Our main impression is that relevant factors in this connection are communicated and understood.

However, the companies did place different emphasis on various aspects of cross-border organization and relations between the global, regional and national organization levels. There were also substantial differences in presentation, documentation, work methodology and follow-up.

Contacts in the PSA: