INTSOK looks at procurement and financing challenges

Offshore staff

SINGAPORE – The maritime and offshore industries continue to face significant challenges when procuring vessels, equipment, or services in Asia, according to a survey conducted by INTSOK, the Norwegian Oil & Gas Partners organization, and released in Singapore.

INTSOK surveyed leading shipyards in Singapore and South Korea, marine engineering companies in Europe and Asia, Norwegian oil and gas industry suppliers, oil companies, and drilling rig operators.

Working in conditions of over-capacity and financially constrained markets, customers still require more detailed and bespoke work, both to gain commercial advantage and to comply with new environmental regulations. The survey concludes that this is a major factor driving demand for more and better cost-efficient solutions.

The survey adds that Norwegian oil and gas industry suppliers face significant challenges in the procurement process when Asian yards are awarded construction contracts for Norwegian continental shelf installations. It also identifies how, where, and when suppliers need to act to win contracts in a changing global oil and gas market.

The objective is to help Norwegian suppliers become preferred suppliers by being included in energy majors' approved vendor lists and the Asian yards' makers list – a necessity for companies hoping to win contracts. The survey says that suppliers must market themselves to the oil companies during the FEED and pre-FEED, much earlier than previously thought.

Additionally, suppliers need more than relevant project experience – they also need to build trust, be flexible, focus on price, meet deadlines, and respond quickly.

The report emphasized the importance of seeking professional legal advice when doing business in Asia, as local terms and conditions differ from contracts in other areas. For example, there are distinct differences between Norwegian fabrication contracts to Asian yard contracts. Balance between parties, the completeness, and crucially the interpretations of terms in contracts can be different. Applicable laws, dispute resolutions, and legal enforcement are also important issues to understand when doing business in Asia.

The report notes that cultural perspectives and business practices in Asian markets are vital to know in order to be successful in winning contracts in the region. A focus on courtesy and respect are of vital significance in Asia, the survey says.

To understand the expression, "Asians do business heart to heart," says much about the importance of building trust, respect and relationships between two potential business partners, and these sentiments came out strongly from the companies surveyed.

03/20/2014

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