Off their knees

Closer collaboration between operator and supplier is about saving time and money, believes Monica Th Bjørkmann, CEO of Subsea 7 Norway and chair of the Norwegian Oil and Gas Association.

She became the first representative of the supplier sector to head the board of the industry organisation on her election a year ago.

“We’re in a time of change, where the operator companies have understood that not everything is about them,” Bjørkmann says, and notes that the suppliers account for 80-90 per cent of hours worked in Norway’s petroleum sector.

She attributes a trend towards greater collaboration between supplier and operator over the past five years to two factors – it lowers costs and shortens project execution time.

“We’re in a time of change, where the operator companies have understood that not everything is about them,” Bjørkmann says, and notes that the suppliers account for 80-90 per cent of hours worked in Norway’s petroleum sector.

“By working closely together from a very early phase, you can trim up to a year off in the planning stage,” Bjørkmann observes.

Contracts

She estimates that her company’s turnover is split about 50-50 between alliances generally involving several suppliers, and the classic model based one supplier and one operator.

In a typical alliance solution, the participants share the financial upsides and downsides and play for the same team.

“It’s a buyer’s market today,” Bjørkmann says. “As a supplier, we must adjust to the prevailing conditions. Regardless of model, opportunities exist for good operator-supplier collaboration.

“What differentiates the models, and appeals particularly to the suppliers, is the opportunity to secure ‘incentive-based’ contacts. These encourage and motivate you to search for better solutions which cost less.”

In any event, she says, the important consideration for the supplier is to be involved at an early stage.

“That allows us to be a partner for the operator, bring out our expertise and experience, and produce cost-effective and optimal solutions.”

Traditionally, she notes, the supplier did not become involved until the operator had picked its concept. “We can then procure and fabricate and install, but can’t exert much influence.”

Difference

Bjørkmann sees a big difference between the 2020 downturn and earlier crises. When the pandemic broke out, the supplier industry had still not fully recovered from the previous slump.

“I’d say we were still on our knees in financial terms. If the operators had then pushed once again and told us to cut costs even more, I think we suppliers would have found it hard.

“But they actually haven’t done that. I think that’s because they understand it’s important for the supplier industry to survive this crisis.”