At the same time, Oceaneering criticizes the balance and rates in the contracts. – It has been tough, but necessary to tighten and reduce costs, Equinor responds.
– The operators make good money and deliver solid results while several suppliers struggle with increased risk and red numbers. The balance is completely wrong, says Erik Sæstad, VP & Country Manager at Oceaneering Norway.
Need funds to develop
It has been some difficult years for the suppliers in the Norwegian oil and gas industry since 2015. Although more and more companies are reporting increased activity and optimism, it is still difficult for many. At the same time, the operators make good money, and this makes Sæstad and other suppliers to react.
– I agree that the optimism is back, which is due to the increased activity, but it is on the basis that the industry has managed to get the cost level well below what many thought was possible in such a short time. It was absolutely necessary to create a basis for more investment and increased activity. But if we are to further develop the technology to achieve even greater cost savings, earnings, and reach climate goals, we need more funding to invest. We need more balance, and today’s contracts give us limited opportunities to do this, explains Sæstad.
Equinor: – Tough but necessary
Equinor believes it was absolutely necessary to tighten and reduce costs from the levels before the downturn. Without this focus, it would not have been possible to start the 20 projects Equinor and their partners have achieved since 2016, says the energy company and cites the accelerated start-up of Johan Sverdrup as an example.
– It has been tough, but necessary to ensure long-term activity on the Norwegian continental shelf. The suppliers deserve great recognition for the restructuring and efficiency that we have made in recent years.
– We want to work with suppliers that are robust and solid. It creates a basis for safety, good quality in deliveries and the right cost, says Torbjørg Opedal, head of Equinor’s network of company representatives who have contact with, and are following up the suppliers on the Norwegian continental shelf.
– Pushed into a corner
Sæstad agrees that Norwegian suppliers have developed good technology in recent years. Oceaneering has also increased their focus on developing new technology. Among other things, the company is frontrunners when it comes to remotely control offshore operations via 4G networks from their “Mission Support Center” on land. In addition, they have delivered an E-ROV to Equinor.
– Technology development is very important to us, but also to the industry. This will contribute to further cost reductions, but also lower carbon emissions. But if we are to further do this, the operators have to involve themselves more and join us. All too often we are pushed into a corner with specified requirements, conditions and details for how they can optimize their own value chain. The suppliers receive far too little recognition for their suggestions on how things can be improved. I miss more dialogue and discussions about commercial innovation, says Sæstad.
However, he does have respect for the fact that it is complicated for the operators to ask for a broader scope of deliveries, as there are fewer companies that can offer these comprehensive solutions.
Work closely with the suppliers
To allow more businesses to present their ideas and solutions to Equinor, the company is actively working to have frequent dialogue with the suppliers. They refer to the ten supplier days the company has from Kristiansand in the south to Hammerfest in the north every year. Also, they are attending this year’s Offshore Technology Days exhibition in Stavanger Forum on October 16th – 17th. As an OTD exhibitor, you will have the opportunity to book one-on-one meetings with key technical and purchasing personnel from Neptune Energy, Oceaneering, Equinor, Wintershall, Spirit Energy, Vår Energi, and IKM on “BusinessHub”.
Also read: Entered a unique agreement on OTD
– This is something we want to be part of. Equinor interacts with a wide range of suppliers every day and platforms like this are important for us. Here we can meet old and make new acquaintances, says Opedal and continues:
– This is an opportunity to gain even better market insight for us. At the same time, is it a good chance for the suppliers to get information about how we work, and what we are looking for in the future. It is important to collaborate and find cost-effective solutions to make the industry more robust to fluctuations in oil prices. Equinor is constantly working on new solutions to ensure good commercial innovation. We work closely with the suppliers every single day to succeed in this work.
Read more: How to meet Equinor on OTD
Neptune Energy, who has become one of the most active operators on the Norwegian continental shelf, is also attending Norway’s largest annual oil exhibition. Erik Oppedal, project director for Neptune Energy Norway, says that dialogue with the suppliers is incredibly important for the company.
– We want a close dialogue with Norwegian suppliers. We are totally dependent on working with local businesses and industries. It’s a conservative industry, and companies like us have to take the opportunity and work closely with suppliers to hear what solutions and technology they can provide. The OTD exhibition is a great opportunity for just that. Together we will challenge, improve and come up with new solutions, says the project director.
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Improvements have resulted in contracts
Although Sæstad in Oceaneering is critical and points out that the industry is operating with non-sustainable contracts, the company is being rewarded for its commitment to technology developments and new innovative solutions. They have secured several important contracts for integrated ROV services. The increased activity and predictability that comes with these awards means that they have employed over 80 people so far this year.
The same goes for Kaefer Energy. They are also being rewarded from their commitment to technology development and new innovative solutions in recent years. Sigve Aabø, director of business development, says that the company has worked hard to reduce costs. Their LEAN work (business method) has attained much recognition with several significant awards. Equinor is among those who are impressed with the improvement work Kaefer Energy has put in over the past few years, and this was much of the reason why they have given Kaefer more work.
– It has been tough during the recent oil crisis, but now the activity level has picked up and there is more momentum in the industry. We have a solid core of activity at the bottom that goes independently of everything else. Stability and long-term visibility are strategically very important for our employees and for the development of the company. The new contracts require a lot of people, and we are well on track to reach the ambition to hire 200 during 2019.
Also read: Seeking 200 new employees!