Norway Sees Benefits from Long-Term Upstream Contracts

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--A long-term contract for operations in the North Sea is a testament to performance and allows the industry to innovate as the sector evolves, services provider DeepOcean (Oslo, Norway) said.

For undisclosed terms, Norwegian energy firm Equinor (NYSE:EQNR) (Stavanger) awarded DeepOcean a four-year contract, with an option for a four-year extension, to support subsea pipelines, high voltage cables and other infrastructure for both offshore renewable programs as well as oil and gas fields.

"Such a long-term agreement allows us to constantly evolve working methods, collaboration models and technologies, with the objective of making offshore operations and subsea cable repair work as cost-effective as possible," said Olaf Hansen, the company's managing director for European operations.

For offshore renewables, DeepOcean will cover planned and unplanned services related to undersea cables. For the oil and gas industry, its agreement covers similar maintenance work, but relies on remote-operated intervention methods.

"We are industry agnostic and share learnings and experiences from subsea operations across different types of operations and industries in order to develop the best possible solutions for our clients," added Normann Vikse, the company's director for offshore renewable energy programs. "Our experience from oil and gas is highly valuable for offshore renewables -- and vice versa."

Norway is unique as an energy producer in that it's a major oil and gas player that powers its own economy largely on renewable energy. Equinor, meanwhile, has been making strides in electrifying offshore platforms, in some cases with renewable energy, to lower the environmental footprint.

Long-term and extended contracts have proven supportive to the Norwegian economy. Equinor in early March exercised two options with several support services firms to extend their respective contracts by four years.

The contracts were signed first in 2018 and already extended once.

"We appreciate the good collaboration we have had with these suppliers for many years, and have therefore added a fourth option of two years in addition to those agreed in the original contracts," Equinor's chief procurement officer, Mette Ottoy, said. "This will help ensure predictability and form the basis for continuous improvements over time."

Equinor estimated that those contract extensions would provide jobs for some 2,000 people and have an estimated value of US$1.7 billion.

Norway is an important producer for the European economy. The government estimated that crude oil production was around 1.8 million barrels per day on average in February, the last full month for which data are available. That was some 3% better than expected. Gas production, however, was 2.6% below the government's forecast.

Equinor recorded something of a banner year in 2023, with oil and gas production averaging around 2.1 million barrels of oil equivalent per day, an increase of 2.1% over the prior year.

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