December 21, 2015
Download the full report here (Norwegian only)
In 2014, Norwegian oil service companies had total revenues of 527 billion NOK, which was an all-time record high. About 195 billon NOK (37 %) of this revenue originated from customers outside Norway.
2014 was the first year since the financial crisis of 2007/2008 where international revenue grew faster than the domestic revenue. While revenue from international customers increased 17 % from 2013 to 2014, revenue from Norwegian customers grew at only 4 %. There are several explanations for this change. Firstly, Statoil was early among the global oil companies to announce costs cutting because of the cash-flow squeeze that many of the oil companies experienced in 2013 and 2014. This seems to have had an especially strong impact on Statoil’s home market. Secondly, several Norwegian yards had low activity in 2014, as many field development projects were awarded to Asian yards in 2012/2013. Thirdly, the activity on Asian yards was at record high in 2014, which benefited many Norwegian equipment suppliers, especially the suppliers of drilling rig equipment. In addition, the very weak NOK/USD exchange rate gave an additional boost to the international revenues measured in NOK.
Of the 195 billion NOK of international revenues, the 20 largest companies (measured by international revenue) generated about 70 %. These 20 companies had about 60 % of their total turnover from international customers. Important companies in this group were rig- and ship-owners, such as Fred Olsen Energy (Rig), DOF (SURF), Farstad Shipping and Solstad Offshore (supply and anchor handling ships). Large equipment suppliers, like NOV, MHWirth and Cameron (drilling rig equipment), FMC and Aker Solutions (subsea equipment) were also among the top 20 companies.
Three countries were by far the largest sources of revenue for Norwegian oil service companies in 2014: South Korea (38 billion NOK), United Kingdom (27 billion NOK) and Brazil (26 billion NOK). In South Korea, the four largest companies delivering to this country generated almost all revenue. Most of the revenue from South Korea was from drilling rig equipment, but cranes, telecom, and automation were important segments as well. United Kingdom was the most diversified country in terms of product segments, with a high share of the revenue generated from operation and maintenance-related product segments. Brazil was the country with the largest growth from 2013 to 2014 (+5 billion NOK/+22 %), mostly driven by deliveries of drilling rig equipment to Brazilian yards.
The most important product segments for international revenue in 2014 was, as it has been over the last years, Topside- and processing equipment. This segment generated 67 billion NOK in international revenues, which was about 35 % of the total international revenues from all segments. The second largest segment was subsea equipment and installation, with 31 billion NOK in international revenues. Important countries for this product segment were United Kingdom, Brazil and USA, representing about 60 % of the total subsea market. Transport and logistics followed at third place, with a total revenue of 29 billion NOK. This segment differed from the other segments in that the diversity of companies was much larger: Ten companies had revenues above 1 billion NOK in this segment.
The strong growth that Norwegian oil service companies have seen both domestically and internationally over the last years is expected to have reached a temporary peak in 2014. Even with large order backlogs at the start of 2015 (measured in NOK), the uncertainty of these orders is large, and both re-negations and cancellations might still happen. Oil companies worldwide have initiated significant further cuts in both investments and operation costs, and this will create a challenging environment for Norwegian oil service companies over the next two to three years, with a possible rebound of the market towards 2020.
Jan Byrkjeland, Head of Consulting
Phone: +47 24 00 42 00
Andreas Eraker, Management Consultant
Phone: +47 24 00 42 00
Julia Weiss, VP Marketing
Phone: +47 48 29 87 61
About Rystad Energy
Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy consulting and research products.
Rystad Energy’s headquarters are located in Oslo, Norway, with additional research teams in India. Further presence has been established in Norway (Stavanger), the UK (London), USA (New York & Houston), Russia (Moscow), Brazil (Rio de Janeiro), Africa as well as South East Asia.