Innovation Norway Singapore senior advisor Jeffrey Lai sees Norwegian knowledge and Asian opportunities as an ideal match
The Norwegian petroleum industry has more than 50 years of experience operating in challenging offshore conditions. We take pride that Norwegian shipbuilders and suppliers are well recognised for their quality, innovation and efforts in delivering world-class solutions covering all areas of the energy and petroleum industry. However, they are faced with a difficult global market even though we have seen oil prices stabilise at around US$60-70 per barrel for several quarters in the past year.
Many suppliers have accepted the new reality that orders are likely to be few and far between for at least the next few years. Any new projects that do come along will see more competition among suppliers and vendors offering aggressive pricing to secure contracts. In my view, it will not be easy but the best way to meet future growth and challenges is to adapt, change, innovate and transform to stay ahead of the competition. You cannot go wrong if you continue to work with customers to show adaptability with cost-effective solutions.
Instead of scaling back operations in Singapore and the surrounding region, it is wise for Norwegian companies to strengthen their presence in Singapore, as this will serve them well in the long term.
This is because Singapore serves as an important hub for Asia, where it remains one of the most attractive growth regions with rising consumer demand for gas and the use of LNG as an alternative marine fuel. Many analysts have predicted that Singapore is on track to become the Asian LNG trading hub to serve the future needs of the LNG cluster within the next five to 10 years.
In addition, Singapore has invested in many exciting initiatives to secure its long-term competitiveness and value proposition by putting up the Sea Transport Industry Transformation Map to catalyse innovation, drive productivity improvements and enhance the skills of the maritime workforce. The aim is to grow the sector’s value-add by S$4.5Bn (US$3.3Bn) and create more than 5,000 good jobs by 2025. Singapore is also recognised internationally as a world-leading international maritime hub, with several global surveys, such as the Xinhua-Baltic Exchange and Menon studies, endorsing it. Today, we have more than 130 international shipping groups spanning not only the traditional container, bulk and tanker sectors but also the offshore and LNG markets. Many businesses see Singapore as a springboard to the Asian market.
These are possibilities that call for ‘ready, able and willing’ Norwegian suppliers to leverage their expertise and experience to seek out new ways of improving overall efficiency and tap into relevant opportunities in the maritime, offshore and gas value chains. In addition, one potential area for collaboration is clean energy. In recent years, Singapore has piloted hydrogen cars, photovoltaic systems, autonomous vehicles and electric vehicles, with ambitions to implement some of these projects as early as 2019. Singapore has always adopted a forward-looking strategy with possible funding support for relevant companies and start-ups to bolster collaboration with local partners and provide a suitable environment to test-bed new technologies to find possible uses for new technology.
With a growing trend of less profitable projects, many buyers will expend more effort to choose the right supplier by using evaluation criteria to achieve timely deliveries. These steps involve having a more stringent supplier selection process, a greater focus on using longer FEED (front end engineering and design) and greater efficiency focus by embracing new digital tools, including non-physical flows such as data, and using technology as part of the project execution.
Many hard lessons have been learnt by suppliers who have had to pay compensation for late deliveries. In one case involving an FPSO project secured by Bumi Armada, they had to pay US$20M in liquidated damages to EnQuest for a nine-month delay in first oil.
Therefore, effective project execution is critical. Clearly, it is not good enough to rely on standard norms and practices anymore. Even the best strategy is pointless unless it is supported by effective execution. Otherwise, any unexpected delays in delivery can transform a profitable contract into a loss-making deal as a result of heavy financial penalties. Notwithstanding the importance of good experience, it is crucial to understand the local markets and there is simply no better substitute than having a local presence to provide hands-on insight to deal with any project disruptions, complexities and customers’ changing demands.
Here, Norwegian companies are fortunate in having the presence of Norwegian Government offices in important international markets to support their efforts to go abroad. As senior advisor at Innovation Norway Singapore and representative energy advisor for NORWEP Singapore (Norwegian Energy Partners), my role is to assist Norwegian small and medium-sized businesses to be more nimble, well-informed and effective in their response to dynamic shifts in demand in the offshore industry. We will organise more outreach programmes like ‘Go Global’ business missions and Singapore offshore roadshows to help them to assess the market, review their business models and create arenas where they can meet with decision makers and understand the possibilities offered.
It seems to be in their DNA that Norwegian companies are an impressive lot. They believe in taking action and taking concrete steps to build new capabilities to be future-ready to meet changing market demands. That explains why we have good participation from Norwegian companies taking part in our programmes, reflecting their strong desire to bring their ideas and businesses to Singapore and beyond.
On the market outlook, we believe there is a strong balanced recovery in the offshore markets and exciting prospects within renewables development so it is not a question if it is going to happen but rather a matter of when it will happen.
We believe there are positive signs that the offshore markets are picking up in certain segments, but unevenly. As well as this, there are exciting prospects in renewables development. So my view is to reiterate that it is a matter of time before both happen. I believe we are overdue for better times. We should see much more of a gradual increase in spending on capex and business activities that will lead to more sustainable higher growth, economic rewards and prosperity in this region.
There is a Chinese saying that “The early bird catches the worm”. Applying that to the world of business, you will have an advantage if you are able to prepare well and act first to capture growth opportunities before anyone else does.
Please contact Jeffrey Lai to learn more about participating in the Norway-Singapore programmes mentioned