the norwegian maritime and offshore market opportunities for finnish suppliers

The Norwegian Maritime-Offshore Market: Opportunities for Finnish suppliers

Christian Svane Mellbye

Senior Analyst – Menon Economics

Agenda

1. The Norwegian maritime industry – overview and current market situation

2. Possibilities for finnish suppliers

3. Shipyards and offshore yards

4. Norwegian equipment manufactures

5. Norwegian shipowners

6. Oil and gas companies

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The Norwegian maritime industry -overview

• Norway is home to one of the worlds leading maritime clusters

• The cluster employees more than 100,000 people and reached a turnover of €65 bn in 2014

• We define the maritime industry as «All companies that own, operate, design, build, deliver equipment or specialized services to all types of ships and other floating units”

– That means that structures, equipment and services delivered to fixed platforms are not included

• The oil supplier industry saw a turnover of approx. €75 in 2014

– €35 bn when excluding the overlap between the maritime industry

• The whole industry is hit hard by the downturn in the oil & gas industry

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Norwegian is home to a world-leadingmaritime cluster

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All parts of the cluster have grown during the last decade

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Value creation in the maritime groups in Norway (2013) and annual growth rate last decade. Source: Menon (2014)

The cluster have experienced a stronggrowth the last decade

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Drilling equipment

Electronics and subsea equipment

Maritime services – financial, legal and technological

Trøndelag: National technological hub –NTNU/Marintek

Number of maritime personell in local communities in Norway

Regional specialization – local clustersof maritime competence and business

The different maritime regions in Norway have specialized ondifferent products and services

1. The Oslofjord Region

– Oslo: Main offices for shipping companies combined with specialized maritime services

– Kongsberg / Horten: Electronics and subsea equipment

2. Southern-Norway

– Dominated by drilling equipment

3. Offshore western Norway

– The Stavanger Region: Oil capital. Driling and productionservices

– Haugaland/Sunnhordland: Offshore-oriented maritime cluster

– The Bergen Region: Centre of industrial shipping. Equipment production. Second most important area for oiland gas supplier industry

4. The Maritime Cluster in Møre

– Design, construction, equipment and operation of offshore vessels. Home to the larg yard groups

5. Trøndelag

– The National Technological Research Centre - NTNU / Marintek

6. Northern-Norway

– The maritime activity is scatterd in the region – an Articmaritime cluster in development

Maritime MøreYards, design, fabrication and operation of offshore vessels

Offshore Western Norway

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4

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What business opportunities exists in Norway ?

• The orderbook at Norwegian shipyards are approx € 3 bn in jan 2016

– Mostly offshore vesseles, but also fishing/aquaculture and passengerferries

– Approx. a third of the value of the vessels will be imported from abroad

– Relationships with yards and owners key: Need to have direct contact withshipowners and/or be on the yards makerslist

• Norwegian equipment manufactures orderbook € 7 bn in 2014

• The shipowners in Norway controll the worlds 7th largest orderbook

• The offshore supplier industry in Norway is one of the largest in the world and the Norwegian industry sources from all over the world

– Dependent on the companies size and service offered, there arepossibilities to become a direct supplier to the oil operators or a sub-supplier to Norwegian entities

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Yards

Equipment

Shipowners

Oil & gas supplier industry

Current market situation: Falling activity & cost pressure

• Falling oilprice and falling demand leads to overcapacity and cost pressure

– Yard orderbook down 15 percent from 2015-2016

– Rigg newbuild market is almost non-existing

– Almost 20 % of the Norwegian offshore fleet is laid up

• Norwegian supplier industry are able to takeadvantage of the weak NOK

• Despite the downturn, the offshore market in Norway is one of the largests in the world

• Increasing focus on ocean industries

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Yards: Norway is home to 40 shipyards, withfour dominating yard groups

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• The four main shipyard groups include:

– Vard (previously STX OSV) – 5 yards in Norway, 5 abroad

– Kleven – 2 yards

– Ulstein – 1 yards

– Havyard – 1 yard

• The shipyards mainly build offshore vessels (PSV, AHTS, Subsea and seismic)

• The larger shipyards focus their activities in Møre og Romsdal

• The smaller shipyards focus on ship repair and delivery ofsmaller vessels such as ferries, fishing vessles and specializedvessels for the aquaculture industry

• In addition Aker Solutions (3 yards), Aibel (1 yard), Kvaerner (2 yards) and Westcon focus on offshore structures and rigs. These yards are included with their logo on the map to theright

4 shipyard groups

4 offshore yard groups

Yards: Norway is home to 40 shipyards, withfour dominating yard groups

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• The four main shipyard groups include:

– Vard (previously STX OSV) – 5 yards in Norway, 5 abroad

– Kleven – 2 yards

– Ulstein – 1 yards

– Havyard – 1 yard

• The shipyards mainly build offshore vessels (PSV, AHTS, Subsea and seismic)

• The larger shipyards focus their activities in Møre og Romsdal

• The smaller shipyards focus on ship repair and delivery ofsmaller vessels such as ferries, fishing vessles and specializedvessels for the aquaculture industry

• In addition Aker Solutions (3 yards), Aibel (1 yard), Kvaerner (2 yards) and Westcon focus on offshore structures and rigs. These yards are included with their logo on the map to theright

Key area for shipbuilding

The Norwegian shipyards current orderbook

• Current orderbook 62 vessels (larger than 40 m)

– Mainly offshore vessels, but the orderbook is more diversified in the latest years since the contracting ofoffshore vessels have slowed

– Meassured in value, offshore vessels still dominate theorderbook of Norwegain Yards.

– 13 larger wellboats for aquaculture

• Over the last ten years, approx 75 % of newbuildings areorderd by Norwegian owners

• Smaller yards include:

– Brødrene AA (ferriers)

– Båtservice Mandal (catamarans)

– Fiskerstrand (ferrier/aquacultur)

– Fosen Yard (repair, earlier offshore)

– Fitjar (aquacultur)

– Grovfjord Mek Verksted ( aquaculture)

– GS Marine (ferries)

– Larsens Mek Verksted (aquaculture)

– Moen Marine (aquaculture)

– Oma (passenger ferries)

– Promek (aquaculture)

– Simek (Offshore/Fishing)

– Sletta Verft (aquaculture)

– Stadyard (aquaculture)

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0

10

20

30

40

50

60

Offshore Aquaculture/Fishing Others

Number of vessels in Norwegian yard’s orderbooks jan.2015/2016. Source: Norwegian Industries

2015 2016

Kleven Maritime - deliveries

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Vessels:Offshore

Design:Norwegian

Owner:Norwegian

Kleven Maritime - orderbook

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Vessels:Offshore, but more diversified

Design:Norwegian

Owner:More diversified

Orders for ferries and passenger vessels

• Currently 15 small/mediumsized ferries and passenger vessels in the orderbook

• Three key builders and NorYards (Bergen Group)

• Environmental focus with hybrid/batteri/alternative fuels (ABB active among others)

• Owners are mainly Norwegian

• Could see increased attention from larger yards

Yard Owner Vessel type

Brødrene AA The Fjords Sightseeing

Brødrene AA Chu King Shipping 250 Passenger

Brødrene AA Chu King Shipping 250 Passenger

Brødrene AA Boreal Transport Nord 150 Passengers



Fiskerstrand Torghatten Trafikkselskap Ferry (Biodiesel/hybrid)



GS Marine Produksjon Nordland Fylkeskommune 50 Passenger/ 2 Car



Oma Baatbyggeri Boreal Transport Nord 70 passengers & 5 Cars

Oma Baatbyggeri Boreal Transport Nord 300 passengers

Oma Baatbyggeri Boreal Transport Nord 150 passengers

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The maritime equipment industry in Norway

• The maritime equipment industry in Norway can be divided in two:

– Equipment for vessels and floating structures

– Drilling and offshore equipment mainly for oil rigs

• The first group is dominated by five large companies:

– Kongsberg Maritime

– Rolls Royce Marine

– ABB

– Framo

– Wartsila

• The second group is dominated by the three major producers that have a 90 % global marketshare in drilling equipmentpackages:

– National Oilwell Varco (inc. APL)

– MH Wirth

– Cameron Sense

• For more information download «Maritime equipmentmanufactures in Norway 2015» from www.menon.no or lookat memberprofiles at Norwegian Maritime Exportshttp://nmexporters.no/?page_id=63

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Equipment for vessels and floating structures

Drilling and offshore equipment mainly for oil rigs

http://www.menon.no/

http://nmexporters.no/?page_id=63

Turnover for maritime equipmentmanufacture and service providers in Norway: € 25 bn

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100

110

120

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120

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200

270

280

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290

300

350

730

1 010

1 050

1 350

0 200 400 600 800 1000 1200 1400 1600 1800 2000

BRUNVOLL AS

HARDING SAFETY/NOREQ AS

WÄRTSILÄ HAMWORTHY

MACGREGOR PUSNES AS

EUREKA PUMPS AS (PART OF ALIGN)

NORSAFE AS

MACGREGOR NORWAY AS (CARGOTEC)

BERGEN ENGINES AS (ROLLS ROYCE)

ALFA LAVAL (FRAMO FUSA AS)

WÄRTSILÄ OIL & GAS SYSTEMS AS

CAMERON SENSE AS

TTS GROUP

WARTSILA NORWAY AS

KONGSBERG MARITIME AS

ROLLS-ROYCE MARINE AS - MEKANISK/EL

MHWIRTH AS

ABB AS

NATIONAL OILWELL VARCO INCL. APL

Million €

Turnover for leading maritime equipment and service providers in Norway (2014)

5200

5. Key shipowners

• Norwegian shipowners controll about 1800 vessels, the worlds 6th largest fleet meassured in fleet value, and 7th largest meassured in DWT

• Historically they have placed a large part of their newbuildings on Norwegian yards

• Today, chemical tankers and deep sea vessels are built abroad, while approx. 75 percent of the offshore fleet is built in Norway

• Shipowners play a key role when selecting the equipment on the vessels and they have a preferance for Norwegian manufactures

• Most of the deepsea and offshore shipp owners are organized in the Norwegian Shipowners Association (www.rederi.no )

– List of members of the Norwegian Shipowners association (approx. 150 members focusing mainly on offshore and deepsea) can be downloaded here: https://www.rederi.no/om-oss/medlemmer/

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http://www.rederi.no/

https://www.rederi.no/om-oss/medlemmer/

Important Norwegian Owner Groups

Group Owner Owner/CommentsNumber of vessels Types of vessel

K. G. Jebsen (KGJS)

Controlled by Kristian Gerhard Jebsen and family 51 Chemcial tankers

Leif Hoegh & Co Leif O.Høegh 51

Siem Offshore Kristian Siem 51 Offshore

Solstad Shipping Solstad Family 46 Offshore

Hurtigruten AS TDR Capitals 41 Cruise

Team TankersPrev. Eitzen Chemicals. American funds 38 Chemcial tankers

Boreal Transport Also landtransport 38 Ferries in Norway

Grieg StarElisabeth Grieg & family 36 Bulk

Bukser og Berging Tug/Offshore 35 Tug/Offshore

Nordic American NATS Herbjørn Hansson 35 Oil Tankers

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Group Name/Owner Owner/Comments

Number of vessels Types of vessel

Fredriksen GroupJohn Fredriksen (London-based, Cypriot national) 234

Offshore service, drillships/rigs, tankers and bulk ships.

Stolt-Nielsen Stolt Nilsen (London-based) 89 Tankers

Wilson ASAControlled by Kristian Eidesvik -listed on Oslo Børs. 84

Short Sea in Norway and Europe

Fjord1 ASOwned by Sogn og Fjordane county and Havila 83 Ferries in Norway

DOF ManagementMøgster family - listed on Oslo Børs 77

Offshore service and subsea

Farstad ShippingFarstad family - listed on OSLO Børs 60


Tide ASAControlled by Hermansen family (Stavanger). Listed on Oslo Børs 59

Ferry's and land transport in Norway.

Torghatten ASA Listed on OTC-list on Oslo Børs 58

Ferry's and land transport in Norway

Odfjell ASA Laurence W. Odfjell 56 Bulk

Gearbulk Ltd.Controlled by Kristian Gerhard Jebsen and family 53

Oil Tankers, Cement

Source: Clarkson/Menon

Important Norwegian Owner Groups

Group Owner Owner/CommentsNumber of vessels Types of vessel

K. G. Jebsen (KGJS)

Controlled by Kristian Gerhard Jebsen and family 51 Chemcial tankers

Leif Hoegh & Co Leif O.Høegh 51

Siem Offshore Kristian Siem 51 Offshore

Solstad Shipping Solstad Family 46 Offshore

Hurtigruten AS TDR Capitals 41 Cruise

Team TankersPrev. Eitzen Chemicals. American funds 38 Chemcial tankers

Boreal Transport Also landtransport 38 Ferries in Norway

Grieg StarElisabeth Grieg & family 36 Bulk

Bukser og Berging Tug/Offshore 35 Tug/Offshore

Nordic American NATS Herbjørn Hansson 35 Oil Tankers

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Group Name/Owner Owner/Comments

Number of vessels Types of vessel

Fredriksen GroupJohn Fredriksen (London-based, Cypriot national) 234

Offshore service, drillships/rigs, tankers and bulk ships.

Stolt-Nielsen Stolt Nilsen (London-based) 89 Tankers

Wilson ASAControlled by Kristian Eidesvik -listed on Oslo Børs. 84

Short Sea in Norway and Europe

Fjord1 ASOwned by Sogn og Fjordane county and Havila 83 Ferries in Norway

DOF ManagementMøgster family - listed on Oslo Børs 77


Farstad ShippingFarstad family - listed on OSLO Børs 60


Tide ASAControlled by Hermansen family (Stavanger). Listed on Oslo Børs 59

Ferry's and land transport in Norway.

Torghatten ASA Listed on OTC-list on Oslo Børs 58

Ferry's and land transport in Norway

Odfjell ASA Laurence W. Odfjell 56 Bulk

Gearbulk Ltd.Controlled by Kristian Gerhard Jebsen and family 53

Oil Tankers, Cement

Source: Clarkson/Menon

6. Oil and Gas companies

• 34 operators and 20 license owners currently in Norway

• Dominated by a Statoil and the large multinationals majors. In addition smaller Norwegian and smaller foreign companies have been established the last 10 years.

• In the last ten years the number of companies active have almost doubled

• Pre-qualifications to become a supplier: Achilles

– http://www.achilles.com/en?cont=fi

• Statoils page on how to become a supplier:

– http://www.statoil.com/en/OurOperations/Procurement/HowToBecomeASupplier/Pages/default.aspx

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Number of companies on the Norwegian continental shelf 2000-2014, by size. Source: Norwegian Petroleum Directorate

http://www.achilles.com/en?cont=fi

http://www.statoil.com/en/OurOperations/Procurement/HowToBecomeASupplier/Pages/default.aspx

Big Projects

• Investments offshore are falling and the oiland gas companies are focusing on cuttingcosts

– This influences the majority of the clusterin Norway. Both yards and equipmentmanufactures are reducing capacity and see short-term

– The Johan Sverdrup oil field is the bigexcemption. Scheduled to start productionin late 2019. Investments expected to be EUR 20-25 bn in the first phase

• The value of the shipyards orderbooks in Norway is still more than 3 billion Euros in jan 2016

• Current ongoing focus in Norway to move goodsfrom roads to ships. Included in this is work is expanding/changing the Norwegian port system

• Harbors with expansion plans: Moss (Borg havn), Orkanger/Trondheim (early stage), Narvik (earlystage), Kirkenes and Svalbard.

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Investments in the oil and gas industry in Norway: Historical numbers 2010-2015 and forecast 2016-2020. Source: NPD

Future activities on the Norwegian Continental Shelf

• The list below includes discoveries where the authorities have approved the plan for development and operations(POD). This means that the operators either have started offering contracts or have the possibility to do so in thecoming years.

– The list is organized by size of the remaining reservoir

• In addition contracts relating to current fields and satellitt fields are awarded constantly

• Statoil the most important oil operator

List of disoveries where the authorties have approved a plan for development and operation (PDO). Source: offshore.no

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Field name Operator Status Remaining investments (mill Euro)

JOHAN SVERDRUP (1st phase) Statoil PDO APPROVED 12 105

AASTA HANSTEEN Statoil PDO APPROVED 3 608

GINA KROG Statoil PDO APPROVED 3 289

MARTIN LINGE Total E&P Norge PDO APPROVED 2 714

IVAR AASEN Det Norske Oljeselskap PDO APPROVED 2 600

VALEMON Statoil PDO APPROVED 2 007

GUDRUN Statoil PDO APPROVED 1 404

KNARR BG Norge PDO APPROVED 1 122

BRYNHILD Lundin Norway PDO APPROVED 525

BØYLA Marathon Oil Norge PDO APPROVED 511

SVALIN Statoil PDO APPROVED 474

Comments and questions can be sent to:Christian Svane Mellbye

Senior AnalystMenon Economics

[email protected]

mailto:[email protected]

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