6. January 202619. January 2026 by trude

Code red – part 4. Two companies become one

Trude Meland

The 2007 merger between Statoil and Norsk Hydro’s oil and gas division was not only a union of two companies, but also of two very different corporate cultures and management systems. While the integration onshore proceeded relatively smoothly, offshore it created major challenges related to cultural differences, loss of expertise, and fragmented work processes. These factors contributed to organizational unrest and weakened safety management – with serious consequences at, among other places, the Gullfaks field.

— Creating a new logo was far easier than creating a new corporate culture offshore.

The 2007 merger between Statoil and Norsk Hydro’s oil and gas division brought together two companies with very different histories and corporate cultures.[REMOVE]Fotnote: Helene Loe Colman (Fafo), Eivind Falkum (Fafo) og Inger Stensaker (NHH, SNF). (2011, mai). En fusjon mellom likeverdige? Integrasjon av Statoil og Hydros olje- og gassaktiviteter. SNF-prosjekt 6172. Bergen. S 22Founded in 1905, Hydro had long been a pillar of Norwegian industry, shaped by a collaborative and informal organizational culture. Historic conflicts such as the Menstad dispute (1931)[REMOVE]Fotnote: On June 8, 1931, a dramatic clash unfolded between striking workers and the police at Menstad, an industrial area between Porsgrunn and Skien. The conflict, later known as the Menstad Battle, marked the end of an intense and heated period in Norwegian labor relations. The background was an ongoing strike organized by the Norwegian Confederation of Trade Unions (LO), during which ten non-union contract workers continued their work at Norsk Hydro’s shipping terminal at Menstad. This provoked the strikers, and in the afternoon of June 8, around 2,000 demonstrators gathered from Skien and Porsgrunn to confront the workers and halt operations. The situation quickly escalated as demonstrators clashed with the police. Fighting broke out, and the authorities responded by dispatching a guards company from Oslo to restore law and order. At the same time, four naval vessels were sent to the area, and the guards company used water hoses against the crowd. The Telemark Battalion was also mobilized, though it never entered into active service during the incident. The Menstad Battle became a symbol of the deep divisions in Norwegian labor relations during the 1930s and today stands as an important historical example of how social and political tensions could erupt into physical confrontation. The event illustrated both the workers’ determination to fight and the authorities’ willingness to use force to maintain order. og etableringen av Hovedavtalen i 1935[REMOVE]Fotnote: The first Basic Agreement between the Norwegian Confederation of Trade Unions (LO) and the Norwegian Employers’ Association (NAF) was concluded in 1935. This agreement marked the beginning of a formalized cooperation between the parties in working life. In 1947, the Basic Agreement was replaced by a new version, and since then it has been regularly renewed. From the 1970s onward, this has usually occurred every four years.The scope of issues regulated by the Basic Agreement has expanded significantly over time. A particularly important extension took place in 1966, when the cooperation agreement was incorporated. This section laid the foundation for a more structured collaboration between employers and employees. In recent years, changes to the Basic Agreement have been relatively minor, limited mainly to adjustments made during negotiations for a new agreement.

and the establishment of the Basic Agreement (1935) fostered a culture of dialogue, informal consultations and pragmatic solutions, often preferred over hierarchical decision-making.

Statoil, by contrast, was established in 1972 in an era marked by nationalization and strong state control of the oil sector. The company was built around formal structures, processes and regulation, with decisions taken through strictly defined procedures. Working life emphasized oversight and compliance with detailed rules.

A 2011 report by the Institute for Research in Economics and Business Administration (SNF) described Hydro as an organization with short decision lines, a cost focus and an authoritarian leadership style, while Statoil was characterized as consensus-driven and bureaucratic, yet also marked by an entrepreneurial spirit. Announced in December 2006 and formally completed on 1 October 2007 under the name StatoilHydro, the merger was more than an organizational combination—it fused two different ways of thinking and operating. Two years later, the company reverted to the name Statoil to simplify the brand. Although presented as a merger of equals, the process created major challenges in practice—especially for some 5,000 offshore employees.[REMOVE]Fotnote: Helene Loe Colman (Fafo), Eivind Falkum (Fafo) og Inger Stensaker (NHH, SNF). (2011, mai). En fusjon mellom likeverdige? Integrasjon av Statoil og Hydros olje- og gassaktiviteter. SNF‐rapport nr. 05/11. SNF-prosjekt 6172. Bergen. S 22. og Borchevink, Aage Storm. (2019). Giganten. Fra Statoil til Equinor: Historien om selskapet som forandret Norge. Oslo. S. 338

The merger’s role in the Gullfaks incidents

The May 2010 gas blowout on Gullfaks C occurred while Statoil was in the midst of major reorganization due to the merger. The Petroleum Safety Authority (PSA) had already flagged serious weaknesses in risk management and technical maintenance on Gullfaks. Subsequent research—notably by the International Research Institute of Stavanger (IRIS)—found that many of these weaknesses could be traced to organizational challenges intensified by the merger. Although the merger was not the direct cause of the blowout, it created an organizational climate in which such events were more likely to occur.[REMOVE]

Fotnote: IRIS. Læring av hendelser i Statoil. En studie av bakenforliggende årsaker til hendelsen på Gullfaks C og av Statoils særingsevne. Rapport IRIS – 2011/156.

Efforts to harmonize management systems, reassign personnel and the loss of critical competence created confusion and knowledge gaps in operations. Adoption of Hydro’s management system, APOS, led different parts of the organization to develop their own ways of working, weakening coherence. IRIS concluded that the merger process produced parallel systems and methods, resulting in unclear roles and responsibilities. For former Hydro employees, Statoil’s stronger process focus was perceived as a centralization of decision-making power, sparking tensions between professional communities—particularly in drilling and well.

A new operating model and organizational fragmentation

Reorganization within the Exploration and Production (UPN) business area aimed to standardize offshore work practices and integrate tasks across the organization. This involved extensive personnel reshuffling—about one third of employees were rotated—and the introduction of new systems such as APOS. IRIS found that Statoil did not fully complete this system change, resulting in a mixture of methods, requirements and practices. Many employees experienced substantial changes in tasks and roles without sufficient training or organizational support.

At Gullfaks, the complexity of the management systems was compounded by a local culture that accepted deviations from procedures. The combination of fragmented systems and an autonomous organizational culture contributed to weakened compliance with critical safety requirements.

Loss of competence and leadership failures

Staffing changes carried out in autumn 2009 and spring 2010 in the wake of the merger had significant consequences for leadership and decision-making on Gullfaks. The PSA pointed out that leadership transitions had been executed with insufficient overlap between incoming and outgoing leaders, undermining transfer of experience and field-specific knowledge.[REMOVE]

Fotnote: Skoland, Kathrine; Nygaard, Gerhard; Nesheim, Torstein; Mykland, Solfrid; Kjestveit, Kari; Iversen, Fionn; Hansen, Kåre; Gressgård, Leif Jarle; Engen, Ole Andreas; Cayeux, Eric og Austnes-Underhaug, Randi. (2011). Læring av hendelser i Statoil: en studie av bakenforliggende årsaker til hendelsen på Gullfaks C og av Statoils læringsevne (Vol. 2011/156, pp. X, 123, 45). IRIS. S. 30.. Local organization in Bergen—previously dominated by Statoil personnel—was taken over by leaders with Hydro backgrounds, while key members of the Gullfaks C leadership were replaced. Five experienced operations leaders were moved and replaced by two new drilling managers without prior experience from the Gullfaks field.[REMOVE]Fotnote: Skoland, Kathrine; Nygaard, Gerhard; Nesheim, Torstein; Mykland, Solfrid; Kjestveit, Kari; Iversen, Fionn; Hansen, Kåre; Gressgård, Leif Jarle; Engen, Ole Andreas; Cayeux, Eric og Austnes-Underhaug, Randi. (2011). Læring av hendelser i Statoil: en studie av bakenforliggende årsaker til hendelsen på Gullfaks C og av Statoils læringsevne (Vol. 2011/156, pp. X, 123, 45). IRIS. S. 21.

IRIS noted that many leaders were simultaneously preparing for transitions to new platforms, which meant that follow-up of operations at Gullfaks was deprioritized.[REMOVE]Fotnote: Skoland, Kathrine; Nygaard, Gerhard; Nesheim, Torstein; Mykland, Solfrid; Kjestveit, Kari; Iversen, Fionn; Hansen, Kåre; Gressgård, Leif Jarle; Engen, Ole Andreas; Cayeux, Eric og Austnes-Underhaug, Randi. (2011). Læring av hendelser i Statoil: en studie av bakenforliggende årsaker til hendelsen på Gullfaks C og av Statoils læringsevne (Vol. 2011/156, pp. X, 123, 45). IRIS. S. 25.

Within drilling and well, IRIS identified two main challenges: harmonizing work processes and governing documentation, and ensuring access to platform-specific competence. Statoil’s “58+” early retirement package amplified the competence challenge by removing valuable experience from the company.

The relocation of drilling and well resources further weakened operational competence—especially critical on a geologically demanding field like Gullfaks. At the same time, Gullfaks was marked by an autonomous culture that developed its own practices largely independent of central directives. These cultural differences contributed to weak collaboration, fragmented understandings of responsibility and an increased risk of procedural deviations.

Implications for safety management

The merger brought more than an organizational combination; it set in motion a complex integration where cultural differences, system changes and competence loss challenged the company’s ability to maintain robust safety management. Harmonization of processes, personnel moves and weakened leadership anchoring created an organizational climate that could undermine safety.

While integration of the onshore parts of the merged company proceeded relatively smoothly, substantial challenges arose offshore. These culminated in April 2008 when management presented the document “New operating model” as a joint proposal. The model aimed to standardize procedures across platforms and was met with strong resistance from trade unions. On older fields such as Gullfaks, standardization was seen as ill-suited. Differences in the technical condition of installations, combined with a strong need for local competence and flexibility, led many to view the standardization requirements as bureaucratic and out of touch with operational realities.[REMOVE]Fotnote: Helene Loe Colman (Fafo), Eivind Falkum (Fafo) og Inger Stensaker (NHH,SNF). (2011, mai). En fusjon mellom likeverdige? Integrasjon av Statoil og Hydros olje- og gassaktiviteter. SNF-prosjekt 6172. Bergen: s 12.