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Eivind Reiten: "We have a role to play in building a sustainable oil industry in Angola"

August 28, 2002, 01:00 CEST

Norsk Hydro's challenges and opportunities in a country like Angola demonstrate corporate social responsibility in practice, says Hydro president and CEO Eivind Reiten in response to a report published by UK-based non-governmental organization Global Witness implying that international oil companies are complicit in economic abuses in Angola.

"Competition on the Angolan continental shelf is fierce," Reiten points out. "All the big international companies are present and most of them have been there for many many years. Hydro started looking at Angola in the early 1990s and saw opportunities to bring forward our experience from deep waters on the Norwegian continental shelf."

Torn asunder

"Setting up business in a country torn apart by civil war raises in itself a number of sustainability issues. The different issues were considered thoroughly. Both Norwegian and Angolan authorities were consulted. Hydro's own ethical guidelines stipulate, among other things, that they are complied with wherever we are in the world. That includes not being party to corruption, and that we apply our environmental principles regardless of where we operate.

"After careful consideration, it was decided to invest in Angola, and we are confident that we have a role to play in helping build a sustainable oil industry in that country and, in the process, make a more general contribution - although on a modest scale - to a better future for the communities in which we are involved," Reiten asserts.

Angola is rich in natural resources, not least in oil and gas. However, measured by economic and social indicators, Angola remains an extremely poor country.

Sharing expertise

"We brought forward a commitment to our operations in Angola to train and develop a workforce consisting mainly of Angolans, who will one day be able to run our operations there without expatriate assistance. We believe our approach to develop competence in and for Angola has boosted our competitive situation in the country.

"Angola has ambitious plans to develop its oil assets in close association with the state-owned oil company Sonangol," Reiten comments. "Hydro is among the world's leaders in the field of deep-water oil production. Norsk Hydro and Sonangol have formed a partnership in which Hydro provides technical assistance to Sonangol through an agreement on offshore Block 34 - thereby transferring management skills and technical expertise to Sonangol.

"Through the Block 34 agreement, Hydro also has an extensive educational program for young Angolan students, who after an intensive preparatory year in the capital city Luanda, can qualify for scholarships and university studies in the UK.

"While the Management and Technology Transfer Program comprises a large part of our Angolan enterprise, the agreements with Sonangol also include financial support from Norsk Hydro for agricultural programs intended to give the local population skills needed to run their own businesses profitably."

Some 20 to 30 kilometers south of Luanda there is much arable land, but not much surface water. Hydro looked at old data from an early petroleum exploration phase and found a layer of water 150-200 meters below ground. The company has since drilled five wells for villages in the area. In a country where a cubic meter of water can be priced as high as USD 7, the wells are of vital importance to local farmers. They can produce 200,000 liters of water per day, which is enough for 6,000 people and 350 farms.

"Norsk Hydro has built a reputation in Angola for being more than just an oil company," Reiten affirms. "Our participation in aid projects shows we are an international company with expertise in such areas as agriculture and energy production, that are of vital importance to the country's development. In addition, we accept responsibility for the local communities in the countries in which we operate, and for the people who work for us.

"Our engagement in Angola is in many ways a prime example of sustainable planning and action culminating in commercial results. At the same time it is clearly our primary job to actually generate value, profits, taxes and jobs. This is the main contribution of businesses - to solve the industrial challenge."

Another world

The fresh debate about the involvement of Norwegian oil companies in Angola is an important and intimate issue for Norsk Hydro's personnel in Luanda.

"It is difficult to arrive from Norwegian conditions, with Norwegian values and live in a society impacted by 25 years of civil war," says Hydro director in Angola Jan Helge Skogen. "We are very proud of what we contribute to Angolan society and feel a sense of commitment to the people who strive to survive in such difficult conditions. That Hydro is here, with its technical expertise and technology, educational program, water endeavors, and school and agricultural projects, is a small contribution to an immensely complex situation."

Confidentiality clause

The discussion about transparency is also an issue that often has been raised. When Hydro chose to sign the agreement on Block 34, it also agreed to a clause on confidentiality regarding the content of the agreement.

"We have to honour that," says Reiten. "As a Norwegian company, however, we also have to follow Norwegian rules for financial statements and accounts. That means that all our Norwegian companies have audited statements that are sent to the official register in Brønnøysund."

Today, Hydro is a partner in five licences in Angola - Blocks 5, 9, 17, 25 and 34. The oil discoveries on Block 17 were the first successful exploration activities where Hydro was partner. The large deepwater field started production in December last year.

Norsk Hydro Oil and Energy website