Several Finnish and Swedish SMEs have expressed interest in expanding their business into the petroleum industry. Therefore, during interviews with Northern Norwegian companies, we have looked to gather information regarding their experiences as the petroleum exploration and developments have moved northwards.
A common theme was expressed by a presentation at the recent Nordområde Conference held in Harstad (see blogpost from 19 Nov 2018). In the session that covered “Market opportunities for the supplier industry” the Manager for Hammerfest Industriservice gave a summary of their experiences. While they have succeeded in gaining a supply contract to Aker Solutions for the Johan Castberg field development, they have experienced difficulty in gaining a foothold in the market, and feel that the business they have gained has not balanced the costs associated with obtaining the qualifications, capacity and experience required in order to win contracts. A Catch-22 situation was mentioned, where the petroleum companies require suppliers to have previous relevant experience in order to win contracts, but this experience is only obtainable from having won contracts. Three other companies responded in question time agreeing with the sentiment, while one other said that their experience was different (a consultant). The answer possibly lies in the advice from Equinor in an earlier presentation where they advised suppliers to form alliances with established supplier companies. This strategy has been successfully employed elsewhere in Norway, such as the Oil and Gas network established in Sandnessjøen. SME companies managed to win supply contracts by forming a consortium with other companies.
Nevertheless, there was a sentiment at the conference that suppliers needed a chance to prove themselves, to gain experience, that would allow them to apply for contracts that required prior experience. A sentiment from a participant from Stavanger was that this was not needed – glibly overlooking the fact that this was how the Norwegian industry in Stavanger got started. The early petroleum contracts awarded to the experienced American companies came with a requirement that they had to involve a certain percentage of Norwegian companies in their development plans.
A similar situation exists with high youth employment, and the difficult for the unemployed to gain the experience required by the employers. It remains to be seen how this will be affected by the digitalisation. Will entry level positions be automated out of existence, or will the existing workforce become outdated and outcompeted by the digital competence of the younger generations?
Northern Research Institute Narvik A.S.
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