Huge new contracts fuel the oil industry

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Just two weeks after a huge new drilling rig for Norway’s state-owned oil company was completed and towed away from Aibel’s yard in Haugesund, Equinor (formerly Statoil) was busy handing out billions of kroner worth of more contracts. The new wave of work for the oil service business confirms that Norway’s oil age is far from over.

The huge new drilling rig for the Johan Sverdrup oil field in the North Sea left its mooring here near the ferry port for the vessel running back and forth between Haugesund and the island of Utsira, which is also the name of the formation in the North Sea where the Sverdrup rig will be working. More major oil service contracts were secured by offshore companies active in Norway on Monday, confirming that the country’s oil age is not over. PHOTO: newsinenglish.no

The Equinor contracts won by companies including Baker Hughes, Halliburton and Schlumberger are the largest ever granted within the drilling and well sector and involve integrated delivery of drilling and well services on most of the oil fields operated by Equinor on the Norwegian Continental Shelf.

“It’s a big day for Equinor and the Norwegian fields,” stated Pål Eitrheim, purchasing director at Equinor. The contracts extend over four years with options for more, and are expected to make Equinor able to drill more wells through stronger cooperation among service firms, rig firms and operators.

They’ll also provide jobs for around 2,000 people spread over 17 permanent oil platforms and eight mobile drilling rigs. Some analysts view the contracts as a step towards further consolidation of the oil industry and more cost-cutting.

“They (Equinor) have packed in service agreements in a big package so they’ll have fewer firms to deal with,” Tore Guldbrandsøy, an oil analyst who leads Rystad Energy’s office in Stavanger, told state broadcaster NRK. “In addition, they’re doing this to bring down prices. These are big contracts, and they’re very important for the players involved.”

Negotiations had proceeded over a long period, and Guldbrandsøy believes they were “tough.” At the same time, they prove that Norway’s “oil age is not over. There are many (oil) fields that will be operated for many, many more years,” he told NRK. “At existing fields, more wells will be drilled. In addition come the new fields, like Johan Castberg, for example.”

The Johan Sverdrup drilling rig was towed first to the Bømlafjord, where it would begin its voyage on the heavy-lift vessel Pioneering Spirit to its North Sea oil field southwest of Stavanger. PHOTO: Aibel/Øyvind Sætre

The Johan Sverdrup field not so far off in the North Sea, meanwhile, is the destination of the huge drilling rig that was finished at the large Aibel facility in Haugesund and recently sailed away after becoming a major part of the West Coast city’s skyline. Company officials admitted to “mixed emotions” as Johan Sverdrup was towed off, three years and three months after Aibel won the contract to outfit the rig in February 2015.

“First of all I’m very happy and proud, not least proud of the many skillful people who have worked on the project,” said Stig Jessen, Aibel’s project director when turning over the rig over to the former Statoil. “At the same time, it is a bit sad and very strange to know that we are finished,” and that the rig (now adorned with a new “Equinor” sign) wouldn’t be in Haugesund any longer. The rig was towed first to the Bømlafjord, where the heavy-lift vessel Pioneering Spirit would lift the platform off its barge and transport it to the Johan Sverdrup field around 160 kilometers west of Stavanger.

Aibel is also, however, among firms winning new contracts from Statoil/Equinor. Aibel, with around 4,000 employees in Norway, Thailand, Singapore and Denmark, will once again play a major role on the field after securing the job for its offshore hook-up, which in turn secures jobs for Aibel workers in Haugesund and its surrounding area. The company was unabashedly proud of winning Equinor’s contract for the engineering, procurement and construction of the deck for the process platform in the second phase of the Johan Sverdrup field’s development. That contract is valued at NOK 8 billion, and one of the largest single contracts in the history of Norwegian oil and gas.

New licenses offered, too
Norway’s Oil & Energy Ministry also sent out offers to 11 companies on Monday for shares in all or parts of 47 blocs spread over nine exploration licenses in the Barents Sea and the Norwegian Sea. The offers are tied to the ministry’s 24th licensing round, with six companies getting offers to operate the fields.

The licensing round is controversial, however, and strongly opposed by climate and environmental activists. Oil Minister Terje Søviknes counters that the new round will allow Norway “to explore more of our promising areas in the north and allow new discoveries. The licensing round is a confirmation that oil companies see opportunities for further profitable petroleum activity in the North.”

newsinenglish.no/Nina Berglund