Equinor bought more from Norwegian suppliers in 2018
In 2018 Equinor purchased goods and services worth NOK 141,7 billion from more than 9000 suppliers globally. NOK 95,2 billion of this went to suppliers with a Norwegian billing address, i.e. 67% of total purchases.
“A competitive supply industry is highly important for the Norwegian continental shelf (NCS) and Equinor. Over the last year the Norwegian content of our total procurements has increased from 61% to 67%. The Johan Sverdrup project is the largest ongoing industrial project in Norway. I the first phase of the project Norwegian suppliers secured more than 70% of the contracts and in the second phase the Norwegian content is even higher. This is an indication of the the adaptability of the Norwegian supplier industry,” says Peggy Krantz-Underland, Equinor’s chief procurement officer.
Whereas Equinor’s total procurements declined from NOK 144,4 billion to NOK 141,7 billion from 2017 to 2018, the company increased its purchases from Norwegian suppliers by NOK 6,5 billion in the same period, from NOK 88,7 billion to NOK 95,2 billion.
“The transition in the energy sector in recent years has been tough for many, but essential to ensuring long-term activity. The suppliers deserve credit for the way they have responded. The current level of activity on the NCS would have been lower without the successful cost reductions achieved by the supplier industry. This has enabled us to sanction new projects in a challenging period. The result is more value creation and important ripple effect,” says Equinor’s executive vice president for Technology, Projects and Drilling, Anders Opedal.
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Equinor and the licence partners have sanctioned more than 20 large projects since 2016.
“We are pleased to see optimism return in the industry. What matters now, is sticking to and building on the right things. Of everything we do, safety is most important. A holistic approach to safety, from design, through development and into operations is central to succeeding with a continuous improvement of our safety performance," says Opedal.
Today he participated in a dialogue meeting with Hans Christan Gabrielsen, head of the Norwegian Confederation of Trade Unions, Ole Erik Almlid, managing director of the Confederation of Norwegian Enterprise, Stein Lier-Hansen, managing director of the Federation of Norwegian Industries, Karl-Petter Løken, chief executive officer of Kværner, and other representatives of the supply industry. The meeting was held onboard the completed Johan Sverdrup accommodation platform at Kværner’s Stord yard.
The Johan Sverdrup field is scheduled to come on stream in November 2019. The analysis agency Agenda Kaupang estimates that the development can generate more than 150,000 man-years of employment in Norway in the period 2015–2025.
"Equinor has had record-high project activity over the last few years. Irrespective of size of each individual project, the quality is equally important. All contributors are important to achieve a successful result, be it local, national or international suppliers. We will work even closer with good suppliers to simplify, standardise and digitalise. This way we, together, can find win-win solutions and at the same time achieve a lower cost level," says Opedal.
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Facts about Johan Sverdrup
- Total investments for the development of Johan Sverdrup phase 1 is NOK 86 billion, and for phase 2 it is NOK 41 billion.
- Phase 1 includes the development of four platforms, three subsea installations for water injection, power from shore, export pipelines for oil (Mongstad) and gas (Kårstø).
- Many activities must be completed before the field is ready for first oil. The two last topsides – for the processing platform and utility and accommodation platform – will be installed and hooked up in the spring of 2019. The eight pre-drilled wells will be hooked up to the drilling platform and prepared for production, and all relevant systems across the field centre must be thoroughly tested before the field is ready for start-up.
- In Phase 1 of the development more than 70% of the contracts have been awarded to suppliers in Norway. This includes the drilling platform (DP), built by Aibel, and utility and accommodation platform, built by Kværner and KBR. Kværner has also delivered 3 out of 4 jackets in Phase 1. Aker Solutions has been responsible for FEED for the whole Johan Sverdrup project, and for the engineering of the riser and processing platform (P1).
- Phase 2 of the Johan Sverdrup project was sanctioned in 2018, and the plan for development and operation will be discussed by Parliament in the spring of 2019. Expected to come on stream in Q4 2022 Johan Sverdrup Phase 2 includes the development of another processing platform (P2), modification of the riser platform and field centre, five subsea systems for production and injection, in addition to preparations for power from shore to the Utsira Height in 2022.
- In Johan Sverdrup Phase 2 the Norwegian content of supplies is expected to be even higher than in Phase 1. This includes the processing platform (P2) awarded to Aibel, a contract for modification work and the construction of a new module for the riser platform awarded to Aker Solutions and Kværner, and the construction of the fifth jacket awarded to Kværner.
- Resource estimate: 2.7 billion barrels of oil equivalent
- Break-even: below USD 20 per barrel
- Total revenues from Johan Sverdrup full-field production are estimated at NOK 1430 billion (2018 value) over the field life. Cashflow is projected at about NOK 1130 billion (2018 value). More than NOK 900 billion is expected to end up in the State purse in the form of tax revenues (more than NOK 700 billion) and through the Norwegian state’s Petoro ownership.
- PARTNERS: Equinor: 40.0267 % (operator), Lundin Norway: 22.6 %, Petoro: 17.36 %, Aker BP: 11.5733 % and Total: 8.44 %.