Aker And Statoil Tie-up Creates Growth Opportunities


BMI View: The signing of the latest subsea contract between Statoil and Aker Solutions is testament to the strengthening relationship between the two Norwegian companies. We believe that the increasingly bullish outlook for production from Norway, along with Statoil's aggressive international expansion , will bring a bout significant growth opportunities for Aker if it manages to tighten and maintain its link with the national oil company.

Statoil awarded one more contract to o ilfield service (OFS) provider Aker Solutions . The latest agreement involves the expansion of Aker's Aagotnes facility on the coast of Norway and the provision of various services such as maintenance, upgrade s and certifications for installed equipment, as well as additional subsea facilities. The deal is set to last five years with a three-year extension option . The OFS company has estimated that around US$1bn -worth of orders have already been booked for the initial period of this deal . This deal is the latest in a succession of partnership agreement s between Aker and Norway's national oil company.

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Aker's Share Price, NOK

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In spite of being involved in projects across 30 different countries, Statoil 's main area of activity remains Norway. Over the past few years, we have been increasingly bullish with regards to the country's oil production. With increased offshore exploration and the opening -up of new prospects, particular ly in the Barents Sea, the long - run ning declin e in output could even be gin to be reverse d by the end of the decade. We have factored this into our forecasts; we see the annual decline in production halting in 2020, when we forecast oil production to grow by 0.5%, the first year of annual growth since 2001.

Things Are Looking Up Towards The End Of The Decade
Norwegian Oil Production, Consumption & Net Exports

The strong partnership between Aker and Statoil gives Aker greater exposure to potential upside in Norwegian acreage , as the state - owned company is estimated to contribute to 55% of all spending offshore Norway , according to Aker itself . One of Aker's strategic priorities is to become Statoil's ' preferred partne r' .

Indeed, with new oil prospects becoming increasingly difficult to reach , Aker's expertise could bring additional subsea contracts. We thus believe that development offshore Norway will continue yielding significant opportunities for the company . This same reasoning is also applicable to Statoil's international expansion plans . Aker's subsea expertise could be easily transferable to Statoil's numerous and growing offshore field s around the world , which therefore could see it spread its global portfolio alongside Statoil's.

This article is tagged to:
Sector: Oil & Gas
Geography: Norway, Norway, Norway, Norway