Norway is among the largest and most advanced maritime nations in the world. Norway is one of the few countries with an effectively complete maritime cluster, with shipping companies, shipyards, equipment manufacturers, classification societies, shipbrokers, insurers and financial institutions among the world’s best. Competence and technology have made the Norwegian maritime industry a global leader.
The maritime industry in Norway employs 100,000 people and creates value of some NOK 150 billion per annum. Norwegian shipping companies operate advanced industrial shipping, including chemical tankers, ro-ro vessels, gas freighters and bulk carriers, and are enjoying particularly strong growth in offshore-related activities. The Norwegian maritime industry has demonstrated its ability to create a world-leading maritime cluster based on knowledge and innovation. Two areas are particularly important for Norwegian Maritime Industry: Artic Shipping and Offshore.
The Arctic – New opportunities for Norwegian industry
The US Geological Survey has maintained its estimate indicating that 23 per cent of the world’s undiscovered petroleum resources will be found north of the Arctic Circle. The majority of these are assumed to lie offshore. If extraction were to accelerate in earnest, this would generate a considerable level of activity in the Arctic, especially for the maritime industry. Polar transit traffic to Asia also has significant potential. The increase in the last three years has been large, even though the 46 transits in 2012 remain a modest overall total. There is also a large growth potential for mineral extraction. Year-round operations in the Arctic are extremely difficult and will remain so; they place high demands on both equipment and crews. The negotiations in the IMO under Norway’s leadership for a binding Polar Code are very important for ensuring that maritime operations in the Arctic are subject to controls that safeguard life, the environment and the climate. Maritime
transport and mineral and energy extraction depend on both local and global acceptance of increased industrial activity in the Arctic. This makes it essential to prevent accidents that may damage confidence in the operations. A broad focus on knowledge and research is also crucial for increasing industrial activities in the Arctic. Norway has a strategic location in the region, with a unique Arctic centre of excellence. Petroleum extraction in the Arctic is already taking place on the Norwegian side of the Barents Sea, which will further strengthen Norwegian expertise. Developments on the Russian side and elsewhere in the Arctic will probably happen at a rather slower pace. But once these developments have been set in motion, there will be huge tasks to take on and actors with experience of the region should have excellent business
opportunities open to them. With increasing interest for arctic area, China need to work more closely with Norway to foster both the technology and experience.
The offshore market is looking up
In many ways, 2001 was a turning point for the Norwegian Continental Shelf (NCS).After a number of years of low oil production and small discoveries, the gigantic Johan Sverdrup field was discovered in the North Sea and Skrugard/Havis in the Barents Sea. The Sverdrup find was the largest in the world in 2011 and it is estimated that between 1.7 and 3.3 billion barrels of oil can be extracted from this field. This makes it one of the four largest ever in Norway. While Johan Sverdrup generated new optimism in this mature area of the NCS, the Skrugard and Havis finds offered new confidence in the potential of the Barents Sea. Before Skrugard and Havis, it was assumed that, by and large, only gas would be found in the Barents Sea. One challenge concerning gas finds in the North is that the infrastructure for the pipeline transport of gas does not stretch further north than Haltenbanken. Skrugard was discovered in 2011, and Havis in January 2012. The finds are around 7 km apart and are now largely treated as a single find. They are between 350 and 400 metres below the surface and
located about 200 km from the coast of Finnmark and a similar distance from Bear Island (Bjørnøya). Statoil estimates that there are between 400 and 600 million barrels of oil in the fields, making the find the second largest in Norway in 2011.
Statoil aims to begin production as early as at the end of 2018. This will be the world’s most northerly development of an oil field. Before Skrugard/Havis was discovered, there was not widespread confidence that finds would be made in the area, not least because Hydro had drilled a dry well only 14 km away 26 years earlier. In February of this year, the Norwegian
Petroleum Directorate (NPD) produced new estimates for undiscovered resources in the Barents Sea and Norwegian sea
areas around the island of Jan Mayen. In the open areas of the Barents Sea and in the North of the Barents Sea, there are
expected to be undiscovered resources of 960 million Sm3 o.e. This is equivalent to 37 per cent of the undiscovered resources on the NCS. These new estimates point to an increase in undiscovered resources on the NCS of a full 15 per cent. There is consequently much interest in oil activities in the Barents Sea. This was clearly apparent in December 2012 when the application deadline for the 22nd licensing round for the NCS expired. Statoil has stepped up exploration and technological development in the North and in 2013 will drill nine wells in the northern part of the Barents Sea. The company has also tripled its budget for technological development in the North to NOK 250 million i 2012. There
is great optimism for the Hop area in the far North of the Barents Sea. The Barents Sea is still an immature area and it may yet hold great surprises.
Strong growth in the Norwegian rig market
In 2012, there were 32 rigs on assignment on the NCS. This number is expected to rise strongly in the years ahead, with 14 new rigs expected on the Norwegian market before 2015. All 14 are already under contract, half of them with Statoil. 9 of the 14 are semi-submersibles. There is a widespread skills deficit on the NCS. Within just the short period up to 2020, the number of rigs is set to grow by 50 per cent. As a result, there will be a requirement for increased access to personnel
in the rig sector of around 4,500 people in the next few years. Many of the jobs that need to be filled require long training.
Combined with the existing rotation scheme, this means that there will be major challenges in terms of recruiting sufficient
personnel. At the same time, we will be moving activities and skills northwards. Access to competence will take on increasing significance and the high level of activity will result in intense competition for qualified labour. Skills drain
is a major problem throughout the entire industry; from fisheries, domestic shipping and offshore vessels, via mobile units, and through to the operating companies. The lack of qualified labour is exacerbated by the fact that we are currently unable to offer a sufficient number of training places. A long-term strategy is therefore required for dealing with the competence challenges in the industry. A lack of measures for securing access to competent personnel will push prices in the sector even higher. The issue requires the social partners, together with the authorities, to sit down and discuss the challenges and solutions in a binding tripartite cooperation. This might create an opportunity for cooperation between China and Norway.
Xiao Gang Tao
VP of NKIF
DNV GL AS