WATCHING THE WORLD OFFSHORE CONSTRUCTION SURGE

With Roger Vielvoye from London Offshore fabrication yards around the North Sea are booming. A flood of orders from British and Norwegian operators has filled the yards that survived the 1986 crash. Facilities mothballed for half a decade are being reactivated, and operators are starting to place orders outside the most experienced North Sea specialist fabrication companies. Norwegian yards, once restricted to domestic business because of high costs, are winning export orders, while Norwegian

July 29, 1991

3 min read

Offshore fabrication yards around the North Sea are booming.

A flood of orders from British and Norwegian operators has filled the yards that survived the 1986 crash.

Facilities mothballed for half a decade are being reactivated, and operators are starting to place orders outside the most experienced North Sea specialist fabrication companies.

Norwegian yards, once restricted to domestic business because of high costs, are winning export orders, while Norwegian operators are taking a less cautious view of placing business with foreign yards.

NORWEGIAN CONTRACTS

Shell U.K. Exploration & Production placed contracts for fabrication of the drilling module and living quarters for the Nelson project in the U.K. North Sea with Aker Stord and Leirvik Sveis, both Norwegian companies.

Aker Oil & Gas Technology, owner of Aker Stord, said the decision to place the drilling module contract in Norway was not just a sign that British module builders have mighty full order books. Norwegian yards, said Aker, are no longer the high cost operations of the 1980s that virtually excluded them from any export business.

Aker's figures for 1987 show that Norwegian labor costs, the main reason for Norway's lack of international competitiveness, were 30-40% more than in Britain. But the latest Aker survey shows that British labor rates, which have been rising sharply, are now only 10% below those in Norwegian yards.

With offshore work so freely available in the North Sea, there has been little talk of protectionism. That is reserved for when times are tough and business is hard to find.

But those tough days could be on the way back, says the U.K.'s Offshore Manufacturers and Constructors Association. British fabrication yards, currently working at 90% of capacity, will see their workload begin to decline next year. By 1993 the volume of work from U.K. development projects could be half the present level, and companies will be looking for business from Norway again.

One company that may be regretting its move away from the traditional North Sea yards is Norway's state oil company, Den norkse stats oljeselskap AS. Last year it placed a contract for the drilling module on the Sleipner A gas platform with Sud Marine of Marseille, France.

The French company has run into severe financial troubles, and all work on the module stopped 2 months ago. In the face of French union threats, Statoil is preparing to take its module back to Norway next month for completion by the Aker Verdal yard.

FLOAT-OUT, START-UP

If all goes smoothly the completed Sleipner platform could be ready for float-out next year to meet the targeted start-up date of Oct. 1, 1993.

However, French unions could carry out their threat to prevent the module leaving Marseille. Statoil will meet that eventuality by getting a new module built in Norway this winter, but it will leave the state company with a very tight schedule for meeting its contractual obligations.

One thing is certain: It will be a long time before Statoil places another key order in a French yard or any other establishment where militant unions hold sway.