Topical HSE luncheon – Thursday 26 August 2004 - speech by The Minister of Labour and Social Affaires

Introduction

First of all, I would like to thank you for inviting me to this HSE-luncheon. It gives me the opportunity to meet central actors of the petroleum industry and address the political issues that I consider important to convey to this industry.

As you may know, I have taken on the responsibility of a new ministry, the Ministry of Labour and Social Affairs. This ministry will be effectively established very shortly, and will incorporate parts of several present ministries.

The main responsibility of the new ministry is to develop a coherent policy for the labour market, working environment and safety, living conditions, occupational benefits, social benefits and pensions. The ministry has the main responsibility for co-ordinating efforts to combat poverty in Norway and for co-ordinating alcohol and drug policy. The new ministry will also have the overall responsibility for implementation of the Agreement on an inclusive working life. Inherent in this is also overall responsibility for health, safety and environment in the petroleum industry.

My main task as Minister of Labour and Social Affairs, is to develop policies that contribute to high employment rates, higher participation in working life, and income assurance for those who are partly or completely out of work. My area of responsibility covers the Norwegian working life.

Today, I will share with you some of my priorities with regard to health, safety and environmental issues in the petroleum industry. In this context, I will address some significant changes around us, and how we together can handle those changes. The challenge is to find solutions for the combined benefit of the companies, the workers, and for sustainable growth in the Norwegian society as a whole.

Priorities from a community perspective

A primary condition for a dynamic working life is to ensure that the working environment is safe. This includes of course all technical and management issues.

Our first priority is clear: The health and life of each individual at the working place. Our second priority is the protection of the environment, and our third priority is the protection of the economical values that industry represent for our society. Health, safety and environment is therefore a key issue for my ministry. Our set of priorities between people, the environment and economic values, in that order, is up front in our minds in the case of conflict of interest between those 3 dimensions. Nevertheless, we see all 3 dimensions as the core of our mandate to ensure value creation. The perspective is a long term perspective and balance is our challenge.

A recent review of structural indicators in the EEA area shows that the countries that choose a balanced approach to growth, are the very same countries that perform best economically.

In 2003 the petroleum industry represented direct employment for 77 000 people and 700 billion Norwegian kroner contribution to the country’s finances. In the light of those figures it is evident that the government has long term ambitions with regard to value creation from this industry. And as minister of Labour and Social Affairs, I can right away clarify my priorities in that respect.

• Avoid disasters with potential of loss of life and damage to the environment.
• I want to ensure that the petroleum industry prevents it’s workforce from getting sick, injured or in any way excluded from working life, and become clients of our welfare system.
• I want to ensure that the petroleum industry will guarantee work for many people for many years to come.
• I want to ensure that the petroleum industry contributes positively to our welfare system for many years to come.

We have heard over the last years that the petroleum industry is at a cross road with regard to alternative models for the future. The Norwegian continental shelf is becoming more mature: new reserves must be found and existing resources must be swept to a larger extend to become more cost efficient. In that context, the industry is challenging our HSE regulations. Hence the title of my presentation: “Value for money- Safety for free?” Is our HSE legislation a threat or an opportunity for value creation?

HSE is often perceived by non specialist as a “soft issue”, a sort of a luxury for rich countries who can afford to think “soft”. I do not think this is true. HSE is about doing the right thing at the right time. Prevention is by far cheaper than correcting errors, repairing break downs or handling an accident. Prevention is the evident choice from the society point of view. It should be an equally evident choice from a company’s point of view.

In addition to the ethical values conveyed by the HSE regulations, we regard HSE measures logically as an investment. We view HSE measures as a must for sustainable value creation and we do not consider that there is a general conflict of interest between added value creation and HSE. HSE measures cost money of course, but so do measures to increase oil recovery. Safety for free is not an option.

The Norwegian society is a major shareholder in the petroleum activities, through direct ownership of petroleum resources and direct contribution in the case of damage to the installations, to third parties and to the environment through a dedicated petroleum insurance fund.

But the Norwegian society is not a common shareholder just ensuring value creation from a nice portfolio. We are a major stakeholder, paying the price for consequences of mistakes, accidents and incidents to a much greater extent than the companies themselves. As minister of Social affairs, I am totally committed to HSE as a means to avoid catastrophes, work related illnesses, injuries or people in any way excluded from working life, and hence becoming clients of the welfare system. For us this is an ethical issue as well as an economic issue.

Is HSE legislation a problem?

The HSE legislation conveys a tremendous amount of knowledge and learning from past successes, failures and tragedies, both in Norway and elsewhere.

Experience is also transferred through extensive reference to international standards and industrial best practices, which I find reassuring. It shows that the lessons embodied in our requirements reflect both knowledge and understanding to which a majority of experts agree. This is the case both nationally and internationally, and makes me confident that the content of our legislation is generally well funded.

The HSE regulations are the product of a tripartite cooperation and, I will say to a large extent the reflection of an agreement between the different parties as to the necessity to regulate certain issues to ensure minimum acceptable standards.

We do not only view HSE as a defensive means against unnecessary costs, we also view investments in HSE as an offensive means to increase the benefit from the business: enhance operation efficiency and regularity, reduce vulnerability to unforeseen risks, increase flexibility with regard to future changes, competitive advantage etc. We view HSE as a potential opportunity for the business. If handled properly and timely. By all.

When analysing the causes of failures, accidents, occupational diseases etc. we often see that the primary causes involve workers, sometimes even the victim. But we also very often see that secondary causes point at other individuals, groups or management. HSE management is not limited to managing the safety behaviour of workers at the work place, at the sharp end of the business. It is also a question of managing the safety behaviour of target groups at the blunt end of the business. It is the responsibility for the decision makers far away from the actual danger to take decisions with a major impact on other’s health, safety and working environment. This concerns both the design and operation phases.

New perspectives, new threats and new opportunities

Today we must adapt to an ever changing environment, and we have to reconsider our strategies to meet our long term ambitions for this industry. This applies to all actors in the industry: the authorities, the companies and the unions.

We have to pay more attention to the fact that very different types of technologies, organisations, professions and cultures are increasingly interconnected to create new ways of conducting the activities and doing of the business. There is a growing integration of operations and resources offshore and on land, locally, regionally, nationally and internationally. These developments challenge our mental picture of the business.

On our side, we have already taken important steps to be able to meet more integrated operations and the need for ever more integrated and holistic approaches. Integration between offshore and land based activities is being reflected in the enlarged mandate of the Petroleum Safety Authority. The PSA is involved in setting the premises for HSE matters on land based installations, and is also appointed as the coordinating body for a number of authorities. The main idea is to ensure a coherent and holistic approach to HSE, both in the coming update of the HSE-regulations as well as in other regulatory activities. Another objective is to ensure that the authorities sort out eventual dilemmas between themselves, so that those dilemmas do not become the problem of the industry.

As outlined before, my long term objectives are clear. A part of my responsibility is to ensure that the petroleum industry guarantees work to many people for many years to come. But because of the ongoing changes in the industry at the moment, it may well mean different types of jobs and to a very different type of work force, at very different locations, compared to what we know today. Our opportunities and our challenge, reside in positioning Norway to be the favoured work place to conduct future petroleum activities.

In the future, work in a completely different type of working environment, may make it necessary to change our HSE focus and redesign our HSE-legislation. In that respect I also call for innovation and fresh perspectives on the future threats to HSE, but I also call for new opportunities to se how we can further improve our HSE performance.

I expect that all parties will seize the ongoing changes as opportunities to achieve significant improvements with regard to HSE and to a sustainable and high employment rate in Norway for a long time to come.

Conclusion

As Minister of Labour and Social Affairs I intend to follow up HSE matters in the petroleum industry with a special interest. Health, safety, working conditions and protection of the environment are core values in our society.

I invite you to continue to challenge our HSE regulations. I genuinely believe that such discussions improve our awareness and are crucial to maintain a momentum towards improvements. I just hope that together, we can improve the efficiency of our debates and increase our productivity.

Cooperation is a major key to success. We remain committed to an active tripartite collaboration between the industry, the unions and the authorities. But we all need to be more innovatively and more holistically in our thinking about today’s and tomorrow’s HSE concerns.

The government’s ambitions with regard to long term value creation from the petroleum industry require innovative solutions from all parties. Indeed, integration of HSE in the business should become more evident, more proactive, more efficient, and better adapted to all relevant target groups.

I sincerely and impatiently hope that we in the near future will hear new questions like: how much can my company benefit from having better targeted HSE investments and better HSE performance? That would be an innovative and more constructive approach towards both added value creation and better HSE-performance.

HSE costs? Of course it costs. Do you get value for the money? Definitely so. Integration of HSE in the business is a major key towards success both for the companies, the workers and the society.