BUSINESS AND ECONOMICS - Producers: too much on your plate; contractor has a deal for you

Aker tackling field as licensee

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Aker Maritime's ambition of becoming a licensee on the Norwegian continental shelf has been fulfilled. In March, the high-profile contractor learned that its joint license application with German oil RWE-DEA for block 35/3 had been approved by the Ministry of Petroleum and Energy. RWE-DEA is operator of the new license, PL 270, with a 51% interest, while Aker Maritime's subsidiary Aker Energy has 49%. The oil industry will follow this novel initiative with interest at two levels:

  • The specific development project that Aker Maritime and RWE-DEA are targeting
  • The general lessons to be learned from a relationship that is in many ways unique, certainly in the North Sea. Will this be a model that will open the way to unlocking reserves that might otherwise have remained undeveloped, and hence inspire imitation?

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Per Audun Hole, Vice President of Aker Energy, has responsibility for contractor Aker Maritime's activities as a licensee in the Norwegian sector.
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When Aker Maritime announced its intention of applying to become a licensee, reactions were mostly favorable. The oil and energy ministry, for example, was relaxed about the idea, and quite happy to judge the application on its merits. Others, without specifically referring to Aker Maritime, expressed concern that blurring the lines between oil companies and contractors, customers and service providers, would make business harder to conduct rather than easier.

Changing role

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Block 35/3 and the Agat gas field which partners RWE-DEA and Aker Maritime hope will prove to be a commercial development
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Per Audun Hole, who as vice president of Aker Energy has responsibility for Aker Maritime's activities as a licensee, sees the move as a logical extension of recent changes in contractors' roles and believes that it creates a mutually beneficial win-win situation for both sides. .

"We have no intention of becoming an oil company in the traditional sense," he said. "The conventional divisions between oil companies and contractors have changed over time. In the last three-four years we have seen more and more examples of contractors taking exploration or production risk in new types of contracts between oil companies and suppliers.

"Our intention is to create new business models together with our customers, and through this, add value to the projects and also increase the number of commercial projects for the industry."

The company's decision to apply to become a licensee came as a result of a strategy process in 1999. Aker Maritime, which had put a lot of effort into extending its operations and skills along the entire value chain, was keen to find opportunities to put its competence to use in developing marginal fields.

"Through discussions with license holders we got constructive feedback on our business idea and RWE-DEA invited us to join them in their application for block 35/3," Hole explains.

Contractor diversity

The move appears to have been well timed, coinciding with a general consensus that a greater diversity of company was required in the Norwegian sector if its diverse resources, were to be best exploited. These resources range from large finds in generally remote regions with little if any infrastructure to small finds in mature areas with plentiful infrastructure.

"With our background as a supplier to the oil companies we can contribute to increase the diversity on the Norwegian continental shelf and to an effective exploitation of its oil and gas resources," he says. "Aker Maritime has a substantial competence in all the disciplines along the value chain, from the reservoir through development and production to decommissioning. We believe this can be attractive for oil companies looking for partners to develop existing or new assets. By combining the complementary sets of competence of oil companies and suppliers we can create new business models resulting in a bigger pie for the participants to share, with respect to both risk and reward."

Gas prospect

Block 35/3 contains the Agat gas field, discovered in 1980 by the original operator Saga Petroleum. It lies about 85 km from land, but in an area bereft of infrastructure. The scenario is one that will allow Aker Maritime to put its expertise to work, though the partners have first to drill a well and prove up sufficient reserves to justify development.

"Our contribution to the PL270 license has been focused on the interface between reservoir and possible development scenarios," says Hole. "This is one of the obvious benefits from our cooperation with RWE-DEA: to have full integration of supplier and oil company competence, and to work towards the same goal with the same set of incentives. If our first exploration well is a success we will utilize all our experience and competence in front-end and detail engineering capacity to optimize the project's net present value."

Partner relationship

Relations between the two partners are somewhat different from those in a conventional license. "We developed the license application in an integrated team and we have now established a joint license team with full responsibility for planning and drilling the first well. Participation in the team is equally distributed between the two partners. The project team reports directly to the management committee. There are no subcommittees involved. In this way, we have direct access to both companies' expertise and technology. Our intention is that this set-up will give us improved efficiency, greater flexibility, faster decision-making and a substantial reduction in the need for separate technical control by the partners."

Hole hopes that the Aker Maritime's PL270 experience will be more than a one-off, though he acknowledges it is too early yet to know if the Aker Maritime model will prove to have a more general application. "How applicable the model is will be dependent on the reaction from oil companies. We hope they will see this as an opportunity to promote projects they do not have the internal capacity for."

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