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Home / Issue Archive / 2010 / July - August #7 / Norway’s Aker Solutions Eyes Rig Making Contracts in Russia

№ 7 (July - August 2010)

Norway’s Aker Solutions Eyes Rig Making Contracts in Russia

   Aker Solutions is big in Azerbaijan’s offshore operations in the Caspian, but when it comes to the former Soviet Union there is a far bigger market that the Scandinavian drilling equipment producer craves to become part of Moscow’s recent NEFTEGAZ 2010 show didn’t feature many Norwegian businesses, but one company that definitely did catch the eye was Aker Solutions.

By Bojan Šoć

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   The Kristiansand-based drilling equipment-subsidiary of Aker Solutions, is the parent company’s top asset in drilling equipment manufacturing. Aker Solutions aspires to do business in Russia and is keen to cater to local companies involved in offshore projects. During the show OGE spoke with Aker Solutions’ sales director for Russia and Caspian Sea Region Heikki Välitalo, asking him to spell out the Norwegian company’s strategy for entering the Russian market.   

OGE: How would you rate the current investment climate in Russia and what are Aker Solutions’ expectations here?
Välitalo: At this stage we in the drilling equipment segment don’t have any major projects in Russia but only single equipment deliveries and that is why we are trying to enter the drilling equipment market. We have good equipment, qualified staff and we are confident that we will be getting drilling equipment jobs in Russia. Our first attempt to market Aker Solutions drilling equipment in Russia was made in 2007, so we’ve been working on this for three years now. The overall investment climate is improving as Russia shows firm signs of recovery from recession.

OGE: Is there a particular segment in the Russian market where your equipment could be competitive both in terms of price and quality?
Välitalo: We are targeting both onshore and offshore business. We have many references from other parts of the world for our equipment operating offshore and that’s what we really are good at: drillships, jackup rigs, semi-submersible rigs, fixed platforms. That doesn’t mean we’re disregarding onshore opportunities. It’s just that we specialize in offshore equipment, it has been the mainstay of our product lines for years.

OGE: But demand for offshore rigs in Russia today is very small – the Shtokman project has again been put on hold and there aren’t many tenders in other locations, too. Who do you think you have the best chance to land a contract with under current circumstances?
Välitalo: We are dealing with Gazprom subsidiaries, such as Gazflot, for example, which is their offshore drilling arm. We are also talking to Gazprom Neft Shelf. As regards new-built rigs, I have to agree that there will hardly be any contracts in short-term. But we are still trying to sell our equipment in this market and prove how good we are in the drilling business.

OGE: What can you say about the company’s performance in this part of the world beyond Russia’s borders?
Välitalo: Aker Solutions has performed very well in the Azeri sector of the Caspian Sea, we have many fixed platforms there. We are also looking forward to working in the north of Caspian and that’s why we’re interested in LUKOIL’s operations and their plans for the future.

OGE: Your business in Russia is a highly competitive one, and in recent years even more so with Chinese producers aggressively entering the market. How tough a job do you think you will have landing new deals here?
Välitalo: I know that the competition is growing, but I believe this growth is related more to the onshore drilling sector, involving smaller rigs, with smaller hookloads. That is the segment where Chinese manufacturers are growing their presence in Russia, offering good prices. As regards offshore, I think we still have excellent opportunity to win contracts.

OGE: What are the biggest hurdles to doing business in Russia?
Välitalo: We just need to be patient and visit the clients to demonstrate that we are serious about getting into this market.

OGE: The market was hot a couple of years ago and that was definitely a better time to come and enter. To what extent has the economic crisis offset that positive moment that had been there, but is no longer?
Valitalo: Of course, all of these investments have been delayed or postponed, so we just have to face that situation and understand that patience pays out in the end. We need to stay close to our potential clients and wait for better times. They need to be aware that we are very keen to work in this market.

OGE: Recently, we’ve seen some really good signs of improvement in Russian-Norwegian cooperation in the oil and gas sector. Are you optimistic in regard to developing those ties?
Välitalo: I can’t say anything on the corporate level, but the things I read in newspapers and learn from other media suggest that the cooperation is picking up pace and improving. In regard to the sale of drilling equipment, I think that we have established good ties with our potential Russian clients and over time they will surely get only better.

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