Recent developments in the Norwegian oil and gas industry are likely to drive new technology development and push companies to explore opportunities in the Middle East to develop new revenue streams.
In Norway, 2014 has been dominated by Statoil's freeze of new projects on the Norwegian Continental Shelf and major cuts in modification, upgrading and rig hire activities. The move has been partly driven by the increasing cost of production, and the service sector in particular is now looking at how it can reduce costs.
Companies operating in the UK Continental Shelf are undergoing a similar realignment, with some of the major service companies having already announced cost reduction programmes in response to pressure from operators.
Stavanger-based attorney Lisbeth Maier, who rejoined the Andrews Kurth Middle East team in October, has gained valuable insight into what lies ahead for Norwegian companies through her participation in a series of recent events, including Technology Days in Bergen and a meeting of the Norwegian Business Group in Dubai, which focused on managing local partner agreements and dispute resolution.
Lisbeth has lived and worked in Egypt, Nigeria and the United Arab Emirates but is now based in her home city of Stavanger and a member of INTSOK – Norwegian Oil and Gas Partners – which was established in 1997 by the Norwegian oil and gas industry and the Norwegian government. INTSOK works with companies throughout the upstream oil and gas industry to expand their business activities in the international oil and gas markets on the basis of the industry's leading-edge experience, technology and expertise.
Lisbeth Maier said: "The current situation in the Norwegian market is having a major impact on the service sector and some companies will be seriously affected by the cuts. However, many of the service companies agree that there needs to be a realignment of costs within the industry. Service prices have climbed too high in recent years and something has to be done to make future E&P projects sustainable and economically attractive.
"One likely outcome is that cost reduction will lead to new technology development and cost-efficient solutions. Norwegian technology companies have a history of improving methods to meet harsh NCS environment and tough safety regulations. Secondly, Norwegian companies will increasingly seek new revenue stream in international markets and the Middle East is an attractive proposition for many of their technologies."
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