Norway’s basis as a sophisticated industrial and shipping nation is one of the factors explaining how Norway managed to develop a world-leading, technologically advanced supply industry. Other factors include the need to handle challenging weather conditions in the North Sea, strict national legislation and HSE requirements, and high standards required by the operators. In many ways, the Norwegian continental shelf has functioned as a laboratory where companies have had to find new solutions and overcome technological challenges to be able to lift the resources.
The Norwegian continental shelf is one of the world’s largest offshore markets, providing a large domestic market for suppliers and a source of employment in all of Norway's 19 counties. A study carried out by the Centre for Applied Research at the Norwegian School of Economics showed that about 86 000 people in Norway were directly employed in petroleum-related service- and supply industry at year-end 2017. Almost 19 000 of these were working offshore. See the article on employment for more information.
After some challenging years, the industry is now more optimistic about the future. After years of growing costs, lower oil prices induced and helped catalyse cost reduction programmes throughout the petroleum sector. The operators and the service and supply industry have managed to reduce costs and increase efficiency, resulting in profitable projects even at low oil prices. Even thought this has been difficult for everyone involved, it was also necessary to stay competitive in the long run. As a demonstration of its adaptability and competitiveness, Norwegian suppliers have won several big contracts both in domestic and international markets recently.
The Norwegian service and supply industry consists of more than 1100 companies providing goods and services in all stages of the value chain, including for example seismic and rigs, engineering services and drilling rig equipment, valves, nuts and hoses for yards, advanced offshore supply and service vessels, subsea technology and offshore maintenance services.
Located throughout Norway, the industry employs a large share of people along the costline. The petroleum sectors main seat is in the Stavanger region, where companies offering a wide range of goods and services are located. In other parts of the country, companies operating in the same market segment are clustered together based on regional expertise.
In and around Oslo is well-established engineering expertise and a cluster of seismic companies. Trondheim has a strong position in education, research and development, while the Bergen region has become a hub for platform maintenance and subsea equipment. In Buskerud, especially in Kongsberg, is a strong cluster focusing on subsea technology, automation and dynamic positioning equipment. Southern Norway is home to world-leading companies specialising in drilling technology. The Aalesund region has maritime companies who together make up a complete shipbuilding and outfitting cluster.
Technologies originally developed specifically for the petroleum sector are also applied in a range of other sectors, along with the service and supply industry's experience and expertise. One example is offshore wind – and floating offshore wind in particular. Another area utilising design principles and technology from the petroleum sector is open ocean aquaculture. Other examples include carbon capture and storage, water purification, sensors used in satellites, and medical research.
Rapid developments in subsea technology are making it possible to extract oil and gas at increasing depths and distances from land. Subsea solutions will play a vital role in the development of new discoveries in the Barents Sea.
Exciting new developments include a breakthrough in subsea compression technology in Norway. Equinor (former Statoil) has two seabed compression projects on the Åsgard and Gullfaks fields on the Norwegian shelf. The aim is to maintain the level of production as the pressure in the reservoirs drops. Equinor envisages the installation of this type of technology on more fields as a cost-effective way of increasing the recovery rate and prolonging field lifetime.
The Åsgard subsea compressor, delivered by Aker Solutions, is the first subsea compression system in the world. It will boost recovery from the Mikkel and Midgard reservoirs by 306 million barrels of oil equivalents. In developing the system, Aker Solutions drew on experience it gained during a pilot project on subsea compression on Ormen Lange.
The subsea wet gas compressor for Gullfaks is another example of cutting-edge technology, and was developed by OneSubsea in cooperation with Equinor. This is the first system of its kind in the world, and is expected to increase the recovery rate for Gullfaks Sør from 62 % to 74 %. This means that production will rise by 22 million barrels of oil equivalents. The compressor station was built and tested entirely by suppliers and subcontractors in Western Norway.
The Norwegian service and supply industry is active in offshore markets all over the world. In 2017, the industry had a total turnover of NOK 340 billion, of which NOK 100 billion or about 29 % came from international markets (report).
Global investments in the offshore sector fell from 2016 to 2017, causing the Norwegian service and supply industry's international activity to decline 25 % in the same period. However, according to the report, global activity will pick up again in 2018 and the following years. Subsea equipment and installation constitute the largest product segment in terms of revenue in international markets for Norwegian suppliers. Seismic experienced growth in revenues from 2016 to 2017.
In 2017, the five most important markets for the Norwegian service and supply industry were Great Britain, Brazil, the United States, Angola, and South Korea. As in previous years, UK sales spanned most product segments. Brazil is a market of growing importance to all segments, particularly subsea equipment and services, but also operational services and logistics (primarily vessel hire). Subsea equipment and services also constitute the largest share of sales in the US market, followed by rig and drilling services.
International revenues in the Norwegian service and supply industry 2017, 10 largest countries
Source: Rystad Energy
Norwegian Energy Partners (Norwep) provides support to the whole energy industry in Norway, after merging INTSOK and INTPOW in 2017. The organization aims to strengthen the long-term basis for value creation and employment in the energy industry, and is the government's most important tool for promoting the Norwegian energy industry in international markets.
For a long time, the industry has been and will continue to be a cornerstone in the Norwegian economy. Long-term efforts to develop a strong Norwegian based service and supply industry has been successful. It employs a vast number of people all over the country, operates at the edge of the technology frontier across multiple segments, and has a demonstrated ability to maintain competitiveness. This also means that the overarching principles of Norwegian petroleum legislation are being followed. That is, resources on the continental shelf shall be managed in a long-term perspective so that value creation benefits society as a whole, among other things by providing employment and strengthening Norwegian businesses.