The latest contract awarded for work on Norway’s huge new Johan Sverdrup oil field in the North Sea cheered the offshore industry on Monday, along with investors on the Oslo Stock Exchange. Oil & Energy Minister Tord Lien was also mighty pleased, while local officials where much of the work will be conducted breathed a sigh of relief.
“This is an extremely important contract in the demanding situation we’re in right now,” Lien told Norwegian Broadcasting (NRK). “At the same time, it illustrates that Norwegian industry is able to maintain its competitiveness.”
Statoil and its partners on the Sverdrup project awarded the contract for construction of decks on the field’s utility and accommodation platform to a joint venture between Kværner of Norway and KBR of the US. It’s worth NOK 6.7 billion (USD 848 million), and will provide hundreds if not thousands of jobs both in Norway and abroad.
Competition described as ‘tough’
Margareth Øvrum, executive vice president at Statoil in charge of technology, projects and drilling, said Kværner and KBR won the contract in “tough international competition.” Norway’s oil and offshore industry has been plagued by high costs in recent years, and last year’s oil price dive has thrown the industry into despair after years of growth.
Øvrum suggested the winning bid put forth by Kværner and KBR, along with other contracts awarded recently to Norwegian firms, shows that “Statoil and the suppliers jointly are about to break the cost curve, to ensure competitive force in a tough time for the whole industry.”
The new platform will consist of two modules, with fabrication of the utility module to be carried out by subcontractors in Poland under management of Kværner. The work will be completed at Kværner’s Stord Norway on the west coast.
KBR, meanwhile, will carry out engineering and procurement of equipment for the utility module, according to Statoil. The accommodation module, destined to be the largest in the North Sea with beds for 560 people, will be built at Apply Leirvik’s yard in Stord and in Emtunga, Sweden. Topside modules will be assembled at Kværner Stord.
‘Proud and glad’
“I’m proud and glad that Norwegian suppliers have won another Sverdrup contract in hard international competition,” Lien told NRK. “This is also good for a region with companies that need new jobs and can adapt to a change in circumstances. This is a very good day for the business, and for Norway.”
Around 2,000 people are expected to be involved in the project and Liv Kari Eskeland, mayor of Stord, was also jubilant, and relieved. “When the news came we just had to hoist the flags and order flowers and cake,” Eskeland told NRK. “We congratulate Kværner and Apply Leirvik for winning such a big contract in such tough competition. This is fantastic.”
Investors were also glad, driving Kværner’s share price up 6.2 percent by midday in an otherwise sluggish market. The price valued Kværner at NOK 1.6 billion, up NOK 100 million since the stock exchange opened Monday morning.