Statoil will soon be offering subsea frame contracts. But still; Norwegian offshore contractors have gone from a bonanza in the North Sea just a few years ago, till a comparatively slow home market. This calls for serious readjusting of their market approach.
Securing a frame contract with oil companies give a certain security, such as FMC Kongsberg Subsea's contract with Norsk Hydro.
They signed a deal last autumn for the supply of subsea Xmas trees, subsea control systems, tie-in systems, subsea manifolds and protective structures as well as installation assistance. The frame agreement has a duration of 3+3+3 years.
Subsea Frame Contracts on Offer: Winning it was a big victory for a relatively small company like Kongsberg Subsea. They also signed a Subsea Service Agreement (SSA) with Statoil in October 2000.
The two Goliaths in comparison, Kværner and ABB Offshore Systems, are now sending in their troops to win future contracts with Statoil.
Statoil is expected to invest more than NOK 40 billion in planned development projects, although not all of them have yet been cleared at the Ministry of Oil and Energy. For Norsk Hydro the figure is approximately NOK 5 billion.
One of Statoil’s current projects is to establish comprehensive frame contracts for subsea systems. They are planning to invite contractors to bid for the contracts in April this year, for signing of the contracts in the autumn.
Statoil has established procedures for evaluating the incoming offers, which includes a combination of price, technology and capacity.
‘At the moment we are unwilling to release the estimated value of these contracts,’ says Information Manager Else Kathrine Nesmoen at Statoil.
However, Norwegian contractors all need to go out and fight on the international market as well – meeting new challenges on all levels.
Areas such as Angola and the Gulf of Mexico will be very important markets. There the technical challenge is production on 800m – 2,000m depth, compared to about 300m offshore Norway.
The Culture: ‘If you want to win contracts in relatively new markets like Angola it is important to realise that the authorities there will want the work to be done locally’, says Vice President for Business Development & Marketing at ABB Offshore Systems AS, Geir Storaas.
‘That is the same way it has always been in Norway’, he adds. Storaas believes Norwegians therefore are familiar with this kind of mentality.
‘This is easy to comprehend both from our social democratic viewpoint and on the background of our experience.
We don’t have it in us to take over the stage in an imperialistic way’, Storaas argues. He adds with a smile, ‘We are good guys, doing what we are asked in the way we are asked!’
Storaas does not elaborate on whether the ABB good guys include only the Norwegian subsidiary, or the whole company.
As a multinational corporation ABB has a long experience from around the world. E.g. they already have 1.000 people employed in Nigeria. At the moment they also have people from Angola being trained in Norway.
When asked whether the infrastructure of offices and the number of employees are decisive in winning contracts, his answer is ‘no’.
‘It is certainly no disadvantage. But the main thing is to understand the culture and the needs of potential customers. Then we can come up with smart, integrated solutions’, he points out.
The competition in new markets is to a very large degree a marketing fight. It is important to be visible, and have a good network.
New Market Niche: When it comes to integrated solutions, ABB is in a strong position. First and foremost because of its size. ‘We see a new market niche opening up for small, mobile production units’, says Storaas.
Such solutions typically include a FPSO, a riser and a subsea installation. This is attractive production equipment for owners of small, marginal fields.
‘Which is, at the end of the day, all oil companies,’ Storaas points out. All portfolios include some small ‘puddles’.
‘What we see now is large shipowners becoming oil companies simply by turning a tanker into a FPSO. They can make these small fields economically feasible, and are therefore attractive customers for our integrated production units,’ Storaas says.
‘Several of these shipowners have virtually become oil companies in all aspect except the reservoir work.’ Norwegian shipping companies have been very active in driving this market.
berges , Fred. Olsen, Knudsen and Navion are good examples. Bergesen is one of ABB customers. Among their present projects is oil production for Trident in Africa, equipped by ABB.
This development is bringing more companies into the oil producing market. Until now it has been difficult for small companies to enter the market. However, possibilities found in small fields have made it easier.
‘The market is therefore becoming more commercialised’, says Storaas. ‘Thereby creating more opportunities for us.’ These new players are also distinguishing themselves from bigger oil companies by being quicker to respond to opportunities and changes.
Financial Power: ‘As a large enterprise ABB is also able to offer customers financial services for their projects’, Storaas points out.
He doubts whether any of ABB Offshore Systems’ competitors in Norway has the financial strengths to finance large offshore projects for their clients. ‘But ABB can,’ he guarantees .
‘Several oil companies wish only to lease equipment for production at small and marginal fields.
In those instances we can take the financial risk of delivering everything except from the ship, lease it to a company for a number of years (the small scale projects typically has a lifespan of 3-4 years), then we take the responsibility of getting the installation deployed elsewhere,’ Storaas explains, making ABB sound very generous. But of course the leasing rate would not come cheap.
Troll Pilot: In addition to the small, mobile units, ABB Offshore Systems’ major subsea development is Troll Pilot. It was tested by Norsk Hydro at their Troll development. During commissioning some technical problems occurred. After some delay, it will be ready for full production summer 2001.
‘It has been received with great interest world wide,’ says Storaas. E.g. where oil companies are under close scrutiny from the authorities.
If a company is planning to shut down a well with 10 percent of the oil still in place, it might be told to produce absolutely all possible oil.
Then the Pilot can be placed right on the spot and deliver the rest in an economical way. ‘A lot of world wide oil companies have opened their eyes to the benefits of this kind of technology’, Storaas concludes.
By: Åse P. Thirud
(scandoil)
© 2001 Mena Report (www.menareport.com)
