OFFSHORE OIL AND GAS AS INDUSTRIAL DRIVER

Transcription

1 OFFSHORE OIL AND GAS AS INDUSTRIAL DRIVER TORGER REVE STAVANGER, 28. NOVEMBER 2013

2 PROJECT TEAM Head of Research, Professor Torger Reve, BI Norwegian Business School Project Leader and Researcher, Marius Nordkvelde, BI Norwegian Business School Project Coordinator and Lead Researcher Yuriy Zhovtobryukh, BI Norwegian Business School Project Partner Atle Blomgren et al, IRIS Project Funding: Norsk Olje og Gass

3 Strong growth in oil & gas the last 11 years

4 Total value creation in oil & gas in Value Creation (in billion NOK) Corresponds to about 21,2% of GDP 600 CAGR=5% Corresponds to about 5,4% of GDP CAGR=3% Suppliers Operators Sources: EKN (2008), IRIS (2012), SSB. Note: Numbers for operators include SDFI

5 Job Creation in Norwegian oil & gas industry Number of Employees Oil & gas-related suppliers created 4,5x more jobs than operators in Suppliers Operators Sources: EKN (2008), IRIS (2012)

6 Value Creation per Employee (Productivity) Value Creation per Employee (in thousand NOK) Mainland Norway (2012) = Suppliers Operators Sources: EKN (2008), IRIS (2012), SSB. Note: Economy average is calculated as GDP per employee

7 Employment-led growth in oil & gas 10,0% 8,0% 6,0% 4,0% 2,0% 0,0% -2,0% -4,0% CAGR: 2.7% 6,7% -4,0% Drivers of Value Creation CAGR: 5.2% 7,6% -2,4% -6,0% Suppliers Operators Number of employees Value creation per employee Sources: EKN (2008), IRIS (2012)

8 Total Value Creation: Supplier industry CAGR=7% Value Creation (in billion NOK) CAGR=10% CAGR=-9% CAGR=-13% vs. CAGR=2,7% in supplier industry on average and vs. 5,2% average CAGR of operators CAGR=-3% - Geology & Seismics Drilling & Well Topside equipment & vessels Subsea Operations Support Sources: EKN (2008), IRIS (2012)

9 Job Creation: Supplier industry Geology & Seismics Number of Employees Drilling & Well Topside equipment & vessels The total increase in employment in operators was about 7510 people Subsea Operations Support Sources: EKN (2008), IRIS (2012)

10 Productivity: Supplier industry CAGR=-10% Value Creation per Employee (in thousand NOK) CAGR=2% CAGR=-10% CAGR=-6% CAGR=-2% Geology & Seismics Drilling & Well Topside equipment & vessels Subsea Operations Support Sources: EKN (2008), IRIS (2012)

11 Employment-led growth in supplier industry 15,0% 10,0% 5,0% 0,0% -5,0% CAGR: -13,1% -3,8% Drivers of Value Creation CAGR: 7,2% 1,7% 5,5% CAGR: 9,8% 11,9% -1,9% Drilling&Well segment had also grown due to productivity improvements CAGR: -2,7% 3,6% -6,0% CAGR: -8,6% 2,1% -10,4% -10,0% -9,6% -15,0% Geology & Seismics Drilling & Well Topside equipment & vessels Subsea Operations Support Number of Employees Value Creation per Employee Sources: EKN (2008), IRIS (2012)

12 Role of foreign ownership in supplier industry: Value Creation Value Creation (in billion NOK, 2012) Geology & Seismics Drilling & Well Topside equipment & vessels Companies with more than 30% of foreign ownership account for about 50% of the value creation in the Norway-based supplier industry 3 Subsea Operations Support Total Domestic ownership Foreign ownership Sources: IRIS (2012)

13 Role of foreign ownership in supplier industry: Employment Geology & Seismics Number of Employees (2012) 40 % of employment in the industry 68 % of employment in the subsea 81 % of employement in the drilling&well Drilling & Well Topside equipment & vessels Subsea Operations Support Total Domestic ownership Foreign ownership Sources: IRIS (2012)

14 Role of foreign ownership in supplier industry: Productivity Value Creation per Employee (in thousand NOK, 2012) % Δ=-57% % Δ=-3% % Δ=-11% % Δ=44% % Δ=83% Geology & Seismics Drilling & Well Topside equipment & vessels Subsea Operations Support Domestic ownership Foreign ownership Sources: IRIS (2012)

15 Offshore supplier industry outperforms the stock market The sector has grown by 10 percentage points more than the market over the last 3 years Sources: Oslo Stock Exchange

16 Forecasts: NCE Offshore Market

17 Product Innovation Across Oil & Gas Sectors

18 Service Innovation Across Oil & Gas Sectors

19 Ekofisk The North Sea Technology Adventure

20 Improved recovery Major technological break-troughs on the NCS Riserless subsea well intervention Integrated operations Subsea Subsea gas compression processing 4C-seismic Managed pressure drilling 2015 Åsgard 3Dseismic Multiphasetransport Waterinjection Troll Oseberg gas injection Horizontal +deviation drilling 4D-seismic 1999 Gullfaks 2003 Vallhall Gullfaks C Åsgard, Visund 2004 Ekofisk 2007 Tordis 1977 Cod/Ekofisk 1979 Statfjord 1986 Ekofisk 1991 Oseberg 1996 Troll Time/Field developments

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22 Pete Miller, CEO Offshore Technology from Norway to Brazil

23 The Norwegian cost level is challenging, but Norwegian engineers are highly competent and productive. Thus Norway will still be able to compete with Asia. It is a question of people Jeff Immelt, DN February

24 Ashok Belani, CTO

25 Norway has attracted some of the world leading maritime-offshore corporations

26 Innovations in Oil & Gas Industry Large companies in oil & gas are conservative organizations who prefer proven technology Thus most NCE innovations are incremental Radical innovation takes place in small offshore spinoff firms Large firms innovate through acquisition of small technology firms Create climate for serial entrepreneurship

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28 Innovation Drivers in Oil & Gas Industry The large NCE projects are the major innovation drivers (cf. Petroleum Tax) The major engineering topside project organizations are drivers (cf. NCE Topside Contracts going to Asia) R&D is a major innovation driver Focus on system innovations, e.g. Subsea Factory Deep water abroad is a current driver Arctic NCS is likely to be a new technological driver

29 Norwegian oil and gas today: Complete value chain

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31 The Location Turning Point in R&D and Innovation

32 The Location Turning Point for Oil & Gas Supplier Industry

33 Will designed in Norway and assembled abroad work in the oil & gas industry?

34 The Location Turning Point: The Offshore Knowledge Commons Complete value chains and new major projects on NCS are critical for innovations and location decisions Norwegian oil & gas industry long term future depends on the extent to which the industry can create a strong offshore knowledge commons that can make the industry independent for the NCS

35 The Emerald Model Knowledge Dynamics Knowledge Commons

36 Offshore Oil & Gas has the strongest emerald Knowledge Dynamics Environmental Attractiveness Cluster Attractiveness Ownership Attractiveness Educational Attractiveness R&D and Innovation Attractiveness Talent Attractiveness

37 Oil & Gas Resources

38 Example of the Norwegian offshore knowledge commons: Lundin Chief Geologist Hans Christen Rønnevik (formerly Saga/Statoil) discovering Johan Sverdrup in 2012

39 Conclusions Norwegian oil & gas industry has shown strong growth rates over the last decade A strong warning signal now is the falling productivity in the supplier industry Norway is still an attractive location for the international offshore industry NCE projects, technological innovation and excellent engineers are what makes Norway so attractive The long term challenge is to build the offshore knowledge commons stronger