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New contract strategy

April 25, 2007, 10:30 CEST

New group-wide frame agreements worth over NOK 2 billion in total will secure Statoil's valve requirements for the next five to seven years.

Statoil has signed a total of 17 agreements with 12 valve suppliers covering nine valve types, catering for Statoil's valve needs in day-to-day operations, new developments and modification projects.

"For the first time, Statoil is signing frame agreements for valves covering the whole spectrum of our business," says Rune Norseng, vice president for procurements in operations support in the Exploration & Production Norway (EPN) business area.

"This secures access to essential equipment at competitive prices in a market with high demand."

Control valves represent the biggest single contract area, with a total value of NOK 830 million. Suppliers Emerson, Kent Introl and CCI have netted these deals. Other key suppliers are Petrovalves and Valvitalia.

The agreements are a result of Statoil's best practice procurement (BPP) corporate initiative which aims to gather control of all Statoil procurements into 64 group-wide equipment categories. The goal is to reduce Statoil's annual procurement expenses by NOK 6.4 billion.

"A large part of our value creation depends on suppliers," says Mr Norseng.

"We can lose sizeable sums if we don't have effective management of these services and products."

Similar frame agreements will be signed for equipment categories such as rotating machinery, cranes and lifting gear and electrical and automation tools in the time ahead.