Entering the Global Oil and Gas Business - concepts and strategies

Transcription

1 Entering the Global Oil and Gas Business - concepts and strategies Anna Aabø Associated Partner Technology Venture, Vice President Kongsberg Helsinki 7`th of November 2013

2 Content The market in Norway Norwegian and Global The activity level Exploration Development Production Entering the market Technology Competence Capacity Some examples of enterprise development 2

3 The Norwegian Oil and Gas market Upstream week 44 Country s oil industry is brimming with activity as pioneering technology and exploration success drive investment figure to new highs Exploration The Barents Sea Havis, Skrugard, Johan Castberg, Gohta Development Production Johan Sverdrup, Edward Gried, Ivar Assen, Martin Klinge, Gina Krog. 40 new years at the Ekofisk Field 3

4 The Norwegian Oil and Gas market For the Supplier Industry the annual Norwegian Oil and Gas market is in the range of 200 Billion NOK The market has grown strongly over the last years, but is anticipating to be at a plateau and possibly with a slight decline for the next few years It is by far the largest Offshore Oil and Gas market for the service and supply industry in the world, exceeding both Gulf of Mexico and Brazil The barriers to entry the market are substantial, and it is a competitive market all together 4

5 The Concepts of Entry On a regional and a global scale the offshore oil and gas industry is a small in number of people, but immense with regards to investments, cash flow and committed for the long term business relations This industry is willing and support R&D without necessary requiring IPR The oil companies have a tradition to work both with very small companies and with the largest The key to any entry by a newcomer is Unique Competence New Ideas Capacity to Deliver 5

6 Entry through New Technology The key in any cases of entry is the capacity of skilled engineers in own organization Any new technology must pass verifications, which means going through the cumbersome avenues from lab to field tests A new technology must "play well" with existing infrastructure of the oil companies It takes time and money to penetrate and access the market The company must be highly dedicated to succeed 6

7 The case of Sekal - penetrating the Market through New Technologies IPR based spin of company from IRIS, a research institute SEKAL Ground breaking new technology for the drilling process Research and development sponsored by the Research council of Norway 30-50%, and industry. Piloting Business development financed mainly by commercial actors Venture fund, industrial venture funds (Statoil and Saudi Aramco) Break-through contract with Statoil 7

8 The Case of IKM IKM, founded in 1998, is one of Europe s fastest growing companies Today s turnover of NOK 4.1 billion and employees in 13 countries IKM focuses on customers and employees. The business philosophy of IKM is the delivery of cost effective, profitable and high quality solutions to their customers Grown through organic growth and acquisitions 8

9 Entry through Mergers and Alliances To have a subcontract with an established service and supply company is possible, and possibly an easier way than to establish a position through technology alone The requirements on a new company will not be less, and there are few chances for correcting misses The business and operational requirements are the same as if the work would be done directly for a oil company Over time a subcontracting structure can be brought further and into an alliance between business partners Local presence is in most cases necessary And skilled engineering competence is deemed necessary 9

10 The case of Kongsberg Established in 1814 The year Norway got it s constitution Established based on national need for defence Advanced military technology developed Expanding through technology and acquisitions The marine sector, control systems now marked leader globally Oil and Gas 2008 Kongsberg Oil and Gas Technologies has a revenue of 1 bill NOK out of totally 15 bill NOK on group level. Significant growth ambitions 10

11 Enter to Market through acquisitions Acquire established companies Do so in collaboration with Venture Capital companies, specifically Hitec Vision and Energy Ventures have clearly expressed their interest Also Technology Venture may assist in selection of possible candidates 11

12 The Case of Hitec Technology company established 1985 multiple technologies Including - Cyber base mechanizing the drill floor Forerunner for Sekal Strong market hold globally offshore Owners exited in 2000 and established a private equity Now - We are a leading private equity investor specialized in buyouts and growth-stage investments in the oil and gas industry In the range of 8 bill NOK in several funds 12

13 Requirements on Management and Organization The oil and gas business is very competitive, but given successful project performances also a very profitable Even the "best team" will not win, if they are not entering these businesses with a 100% dedication, also using its best people It may take time (1-2 years before first contract), and it will most certainly cost money It is advised to move one or a few people to Norway on a regular basis 13

14 Summary Finland can obviously support a significant number of domestically jobs in Finland serving the Norwegian Oil and Gas Industry, given a dedicated strategy by the companies entering the business in Norway If a company succeed in Norway and in particular in Stavanger, you can succeed anywhere in the world of Oil and Gas Technology Venture`s experience with introducing Finnish companied s to this marked is that they lack dedication and underestimate the need for engineering However, the Finnish industry and Technology are in high regards in Norway, and the prospects are good, given a full dedication 14