Subsea 7, Det norske and Aker Solutions form development alliance, Owner Operators Can Benefit

Subsea 7 S.A. announced, together with Det norske oljeselskap and Aker Solutions, the formation of a new alliance. The alliance combines Det norske's exploration and production know-how with Subsea 7's capabilities in the engineering, procurement, installation and commissioning of subsea umbilicals, risers and flowlines (SURF) and Aker Solutions' expertise in front end engineering, brownfield modifications and subsea systems.  The new partnership will enable the operator and suppliers to work as one integrated team to find the most cost-effective solutions for developing Det norske's entire Norwegian subsea field portfolio.  The companies will form an integrated project management team with experts from each.  This will enable continuity from one field development to another and facilitate a reuse of solutions and technology that will lower costs, reduce development time and promote safe and more efficient work methods amid a focus on continuous improvement. All parties share both risks and rewards. The alliance accord comes after Det norske in June announced a four-year framework agreement with Subsea 7 for SURF services and with Aker Solutions to provide subsea production systems and services for the operator's oil and gas developments in Norway.  The scope of these framework contracts has a potential value of about NOK 2.8 billion (US $339m), of which over 71 percent is Subsea 7's share and the remainder is Aker Solutions' portion.  Operator and suppliers will be able to work as on integrated team to find solutions for developing Det norske's subsea field portfolio in Norway. Although this development alliance will initially benefit Det norske, ARC believes that the initiative will likely continue to spur other alliances or partnerships in the deeper water offshore or subsea segments as other owner operators continue to seek out ways to lower costs, increase standardization, increase production and EUR, and improve collaboration among the key stakeholders that comprise most offshore or subsea projects.  As oil prices begin to slowly recover in the coming months as the market rebalances, operators will be making proactive moves that will position them for more attractive margins in the longer run.