21 October 2015, News Wires – New standardised contracts have been agreed between oil companies and suppliers working off Norway that are intended to cut costs and boost competitiveness amid low oil prices.
Industry association Norwegian Oil & Gas (Norog) has signed two agreements with Norsk Industri covering fabrication of new field facilities and modification of existing ones, with one remaining deal to be signed to renew all petroleum contracts on the country’s continental shelf.
The standard contracts are intended to counter a costs spiral that saw offshore costs increase around twofold in the period from 2005 to 2012, undermining project profitability for oil companies that has been further exacerbated by low oil prices.
Norog managing director Karl Eirik Schjott-Pedersen said the revised deals, signed in the presence of Petroleum & Energy Minister Tord Lien, would “cut costs over time and reduce man hours used on paperwork”.
The association said in a statement the intention of the contracts is to “ensure predictability and commercial security”, while also avoiding unnecessary contractual disputes, to promote more cost-effective project execution.
They originate from the earlier Konkraft review of the competitiveness of the Norwegian offshore sector that called for greater standardisation to cut costs, among other recommendations.
“These contracts contribute to lesser costs for each company winning contracts and for operators giving contracts,” Schjott-Pedersen was quoted as saying by Reuters.