The Australasian region is considered the largest growing international market for Norwegian offshore suppliers. Among some of the key drivers are export of drilling rig and FPSO equipment to Asian shipyards, subsea deliveries to deepwater field developments offshore Australia, and China’s growing energy demand.
According to a recent report by Menon Business Economics, Norwegian offshore supply companies’ international turnover to Southeast Asia, including Australia and India, rose from NOK 24 billion in 2007 to 32.9 billion in 2009. The report attributes the extreme growth to the large export of drilling equipment to rigs and floating production storage and offloading (FPSO) vessels that are built or converted in Southeast Asia, particularly Singapore.
These rigs and FPSOs are built in Singapore, Korean and Chinese shipyards, but eventually end up being used worldwide. Italy’s ENI for example recently ordered an FPSO from Hyundai in Korea that will be used to produce the Goliat field in the Barents Sea offshore Norway. This project has in turn created opportunities for Norwegian suppliers.
The FPSO is based on the Sevan FPSO 1000 concept, developed by Sevan Marine, which is capable of handling the harsh environmental conditions in the Barents Sea. Stavanger-based Bjørge Eureka was awarded a USD 10 million contract this September for the delivery of main centrifugal pumps to be installed in the hull area of the Goliat FPSO. Aker Solutions will be supplying an on-vessel Pusnes mooring system under a NOK 150 million contract awarded this July.
|Photo: Sevan 1000 FPSO, developed by Sevan Marine, is being built by Hyundi in South Korea, for the Goliat field in the Barents Sea.
© 3D illustrations by Sevan Marine
Australia Up & Coming
However, the country representing the largest and most up and coming market in the Australasian region into 2014 will be Australia, according to Håkon Skretting, INTSOK regional director for Russia, China, Australia and Korea. The country has among the greatest potential for undiscovered petroleum resources and the industry is working on bringing onstream several huge gas fields offshore Australia.
Woodside is currently developing Pluto and has plans to develop Browse and Sunrise. Chevron is building Gorgon, which is three times the size of Norway’s Snøhvit development in the Barents Sea, and has the large LNG project Wheatstone. Shell is looking into world’s first LNG production plant at Prelude, while INPEX is developing the Ichthys project.
Australian deepwater field developments have resulted in mainly subsea equipment contracts for Norwegian suppliers, but also controls and instrumentation and engineering work. Aker Solutions has a NOK 550 million contract to supply subsea umbilicals and associated equipment for Chevron’s Gorgon Project and is key subcontractor for the front-end engineering and design contract for the hulls for the semisubmersible central processing facility and FPSO for the Ichthys project.
Australia is also important because of its closeness to the growing energy market in China, the world’s second largest economy. According to the IEA’s world energy outlook 2009, non-OECD countries are expected to account for more than 90% of the increase in global energy demand between now and 2030, driven largely by China and India.
“China is the world’s factory and they need more energy to produce,” said Skretting. “The Middle East and Australia are going to supply them.”
The Norwegian oil industry is targeting the Chinese oil and gas market for exploration opportunities and oil service contracts, both onshore and offshore. China produces more oil than Norway – nearly 4 million barrels per day compared to 2.35 million in Norway, according to the US Energy Information Administration (EIA) – but is a net oil importer because of its huge energy consumption.
About 15% of overall Chinese oil production comes from offshore reserves, where most of China’s net oil production growth is expected to come, according to the EIA. Current offshore production is forecast to rise from 680,000 barrels per day to 980,000 by 2014. One of China’s current biggest projects currently is the offshore gas field development Liwan in the South China Sea.
One area where Norway can contribute here is its expertise in improved oil recovery. China has a recovery rate of only about 20-30% compared to the Norwegian Continental Shelf with 46%. INTSOK is scheduled to conduct a two-day workshop with the China National Offshore Oil Corporation (CNOOC) next year regarding improved oil recovery.
“I’m convinced China has a lot of potential to produce oil from already drilled wells of more than 20-30%,” said Skretting.
However, the bulk of the country’s production, approximately 85%, is located onshore, according to the EIA. The international petroleum industry is increasingly looking at tapping the country’s shale gas to help meet China’s strong gas demand growth. Norway’s Statoil has said it believes there are possibilities for it entering into an agreement with China to develop the country’s onshore shale gas deposits.
“Shale gas is the major growth story in China gas,” said Gavin Thompson, Wood Mackenzie’s China Gas Study director, in its study Race for Supply – the Future of China’s Gas Market released in July. “As China's national oil companies increase their unconventional gas activity, they will look for partnership and technology in the initial phase of development, creating a window of opportunity for qualified foreign players.”
Statoil has been present in China since 1982. It stopped producing at the Lufeng 22-1 oil field last year, but still has an office in Beijing looking at future opportunities. In June, Statoil signed a cooperation agreement with Sinochem, China’s fourth largest oil company, to jointly investigate opportunities in Brazil and elsewhere. The agreement followed the Peregrino transaction, whereby Sinochem bought Statoil’s 40% stake in the oil field offshore Brazil.
|Australia is regarded as the key subsea market within the next four years. ©: INTSOK market report - Rystad Energy