Offshore industry in norway

Business Opportunities in Offshore Industry in Northern NorwayFinpro NorwayAntti Mäkikyrö, Saara Annola

Introduction (1) - Business opportunities in Northern Norway

• In recent years, the northern Norwegian economy has grown faster than the rest of the country - a development that is expected to continue in the coming years. Norway's future welfare depends on growth in the north.

– The government’s national budget includes investments of NOK 3,15 billion in the northern Norway for 2015. The focus areas will be: international cooperation, business, education, Infrastructure and the environment, and security.

– Unemployment will remain low and the continued growth means that the region needs more expertise.

• It is estimated that there will be total investments of NOK 300 billion in Northern Norway during 2014-2022. From these investments, there will be:

– Private investments: NOK 211 billion

– Public investments: NOK 89 billion

• At the moment, the situation in Northern Norway is:

– Ongoing investments: NOK 32 billion

– Financed investments: NOK 57 billion

– Planned investments: NOK 210 billion

(Sources: The Norwegian Labour and Welfare Administration (NAV), www.kbnn.no, Government’s National budget 2015)4/28/2015 © Finpro

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Introduction (2) - Business opportunities in Northern Norway

• In Northern Norway, the estimated investments of almost NOK 300 billion are divided by following sectors(during 2014-2022):

– Housing Construction (NOK 100,715 billion)

– Offshore (NOK 65,418 billion)

– Infrastructure (NOK 38,953 billion)

– Energy (NOK 36,547 billion)

– Public Construction (NOK 21,328 billion)

– Food & Nourishment (NOK 13,613 billion)

– Health (NOK 13,461 billion)

– Manufacturing (NOK 5,147 billion)

– Maritime infrastructure (NOK 4,171 billion)

– Seafood industry (NOK 2,337 billion)(Source: www.kbnn.no)

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Introduction (3) -Business opportunities in Northern Norway

• Estimated investments during the years 2014-2022 in Northern Norway by areas:

– East-Finnmark: NOK 17,4 billion

– West-Finnmark: NOK 37,5 billion

– Tromsø, Mid-Troms, North-Troms: NOK 72,8 billion

– Hålogaland region: NOK 33,4 billion

– Bodø region: NOK 45,0 billion

– Helgeland: NOK 27,5 billion

– In addition, NOK 60,0 billion in offshore (continental shelf)

(Source: www.kbnn.no)

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Offshore (continental shelf, “sokkel”) -Market Demand (1)

• There is optimism in the industry with new reserves found in recent years, even in mature areas. Together, these discoveries amount to 400-600 million barrels of oil equivalents. Therefore, there will be several new projects on the Norwegian continental shelf and in Norwegian waters in the next 10-15 years. Several of these will demand new technology and risk taking.

• The authorities are facilitating increased oil and gas activities in Northern Norway, and the oil companies and the supplier industry are therefore moving north. The challenge in this area is that demanding Arctic conditions require new knowledge and technological solutions that meet requirements relating to HSE, operations in environmentally vulnerable areas and cost-efficient development and production.

• There are licencing rounds every year, some years in mature areas, but sometimes in new areas. The demarcation agreement with Russia gave us 87,000 square kilometeres of new shelf and there is currently a process on whether to open up new areas in the far north in the future.

• In the Petroleum White Paper, the Government has confirmed the strategy for developing the petroleum with a proactive, parallel commitment to:

– Increased recovery from production fields

– Developing commercial/profitable discoveries

– Exploring in open acreage and

– Opening up new areas (Source: Invest in Norway)

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• The Norwegian shelf is well-equipped to face and tackle the changes that are happening, in spite of the significantuncertainty in the petroleum industry.

• In 2014, 22 new discoveries were made – two more than in 2013. Once again, exploration activity was highest in theNorth Sea where a total of eight oil and gas deposits were proven. Five discoveries were made in the NorwegianSea, and nine in the Barents Sea.

– Large investments with several new fields planned to start production in the coming years. This includesprojects such as Johan Sverdrup, Aasta, Hansten, Edvard Grieg, Norvarg and Goliat.

• For example, at Goliat (the oil field in the Barents Sea) the production is planned to start in mid-2015. InHammerfest, local industry gets contracts and other spin-offs by the project.

(Sources: Norwegian Petroleum Directorate: The shelf 2014, www.kbnn.no, www.barentsobserver.com)

(Maps: Norwegian Petroleum Directorate / The shelf in 2014 / http://npd.no/Global/Engelsk/1-Whats-new/News/The-shelf-in-2014/Presentasjon_engelsk_utgave.pdf)

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Offshore (continental shelf, “sokkel”) -Market Demand (3)• It is estimated that NOK 172 billion was invested in the petroleum activities on the self in 2014.

Investments are expected to drop around 15 per cent from 2014 to 2015 and by an additional eight per cent to 2017, and will then plateau with a moderate increase from 2018.

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http://npd.no/Global/Engelsk/1-Whats-new/News/The-shelf-in-2014/Presentasjon_engelsk_utgave.pdf


• High costs and weaker oil prices could drive necessary readjustments that will strengthen the petroleum industry over the long-term. (Norwegian Petroleum Directorate, NPD)

• Eleven fields were under development at the end of 2014: nine in the North Sea, one in the Norwegian Sea and one in the Barents Sea. This is a record-high number and will result in considerable investments over the next few years.

– "There are currently 79 producing fields on the Norwegian shelf. These are profitable fields where both the State and the companies are making money, and this is how it will stay, even if the oil price should drop further," (Bente Nyland, General Director/NPD, 15.1.2015)

– “55 per cent of Norway's total oil and gas resources remain in place, waiting to be produced. These remaining resources provide a basis for continued significant value creation and high activity level for many years to come.” (Bente Nyland, General Director/NPD , 15.1.2015)

(Source: NPD: The shelf in 2014, http://npd.no/en/news/News/2015/The-shelf-in-2014/ and http://npd.no/Global/Engelsk/1-Whats-new/News/The-shelf-in-2014/TheShelf2014-engelsk-press-release.pdf)

(Map: Norwegian Petroleum Directorate / FactMaps, http://gis.npd.no/factmaps/html_20/)

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Figure: Historical investment figures for the 2009-2013 period and forecast for 2014-2019. (Norwegian Petroleum Directorate. The shelf in 2014. http://npd.no/Global/Engelsk/1-Whats-new/News/The-shelf-in-

2014/TheShelf2014-engelsk-press-release.pdf)

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• In Northern Norway, estimatedinvestments in the offshore industryare NOK 60,0 billion (during 2014-2022).

• Since the opening of the Barents Sea, there has been a substantial growth in activity in the northern part of Norway, and there is expected to be more activity in the years to come.

– The Norwegian Sea:

• Aasta Hansteen field development

• PolarledI –gas pipeline

– The Barent Sea:

• Goliat oil field

(Sources: www.kbnn.no, Norwegian Petroleum Directorate, NPD)

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• Figure: The Norwegian Sea - Challenges and possibilities (Source: NPD, The shelf in 2014,

http://npd.no/Global/Engelsk/1-Whats-new/News/The-shelf-in-2014/Presentasjon_engelsk_utgave.pdf)

• Figure: The Barents Sea – Challenges and Possibilities (Source: NPD, The shelf in 2014,

http://npd.no/Global/Engelsk/1-Whats-new/News/The-shelf-in-2014/Presentasjon_engelsk_utgave.pdf)

Finnish Offering (1)

• There are currently more than 1300 suppliers in the Norwegian oil and gas industry

• Finnish companies have expertise in many of these supporting industries

– Technical workmanship, equipment manufacturing, engineering, ship building etc.

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Finnish Offering (2)

• Production technology of ports and shipyards incl. offshore equipment

–Cranes, welding automation, environmental compliance…

• Ship & rig engineering, architecture, design and software

–Motion analysis, mooring analysis, hydrostatics

–Structural design and engineering including FE stress and fatigue analysis

–Arctic testing (Aker Arctic)

• Ship and rig building

–Supply vessels other special vessels

–SPAR platforms, other platforms

• Ship & rig technology

–power generation - prime movers, fuel technology (gas), propulsion systems, vessel positioning, electrification, telecommunication, control & automation, interiors, oil & gas handling, pumping, inert gas systems, water management, emission control systems and environmental compliance solutions

• Ship & rig operation (software)

• Services

–Site Assistance, Construction Supervision & Commissioning, Contracting Services

• Oil spill technology

• Safety and security technology

(Pictures: http://innovate.statoil.com/businessneeds/PublishingImages/468_Environmental.jpg, http://www.finlandtimes.fi/assets/images/news_images/2013/09/17/for_details/image_2470_2.jpg, http://www.energydelphos.com/wp-content/uploads/Pemex-Intsok-Deepwater-Mooring-Aker-Solutions.pdf , http://www.gcs.europ-assistance.com/sites/default/files/sitemedicalservices305x280px.png )

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Contact information

Finpro Norway, Finland Trade Center

Antti Mäkikyrö

Head of Trade Center

+358 29 4695 380

[email protected]

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Thank You!

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