Tore Moe – Australian Oil and Gas Advisor, INTSOK, Australia
Tore Moe, Australian advisor at INTSOK, the Norwegian Oil and Gas companies’ support and promotion organization, explains how important similarities between Norway and Australia enhance Norwegian companies’ competitiveness, and highlights the main specificities of the Australian market that should draw market entrants’ attention.
What is the scope of INTSOK’s priorities and objectives in Australia?
INTSOK has been globally active for more than twenty years, but the organization has only been present in Australia since the beginning of the millennium. As the organization promoting Norwegian oil and gas capabilities in international markets, our main mission is to both assist and promote Norwegian oil and gas companies in Australia, whether they are already active locally or undergoing the process of establishing an Australian footprint. In the country, more than 50 oil and gas Norwegian companies already conduct business operations, and 40 of them are members of INTSOK. We thus provide our members with a full range of services, varying from market research or market opportunity assessment to the joint design of market entry strategies. In a certain manner, we can thus be seen as a strategy consulting organization specialized in oil and gas markets.
We also promote the Norwegian oil and gas industry and our members’ activities through various market engagement activities, such as network meetings or lunch & learn events. We also operate as a concrete bridge between the two countries for special occasions. For instance, Norway holds in 2016 its bi-annual offshore conference called ONS, for which INTSOK will send a large Australian delegation to Norway, composed of both public and private organizations.
What kind of knowledge sharing are you able to foster between the two countries?
INTSOK organizes technical conferences in Australia once or twice a year, for which we usually invite a delegation of 15 to 20 Norwegian companies. These companies focus on strategic areas where Norway boasts world-class expertise, such as subsea, drilling, offshore floating production, deepwater technologies and health, safety and environmental management. Technically, there are a lot of similarities between Australia and Norway: both of them are offshore-centered countries, with oil and gas resources located in increasingly deeper waters, in environmentally sensitive areas and remote locations with limited support infrastructures.
Furthermore, some of the current challenges the Western-Australian industry is facing have also occurred in Norway. Norway is a high-cost market and used to stand for a very long time as one of the most expensive places to operate, whereas Australia currently displays a very similar economic profile. For instance, in the last two years, Australia has been ranked as the country offering the highest salaries in the global oil and gas industry! This local context clearly bolsters a growing need for production efficiency solutions, while Norway has already successfully experienced a cost-effectiveness and productivity improvement transition.
Streamlining production cost is only one example among many others that underscores the kind of synergies and knowledge transfer that INTSOK strives to create between the two countries. In the future, we want to ensure the Australian eco-system could benefit from a larger number of other Norwegian innovations that have already proven their efficiency in the North Sea.
On the other hand, why do Norwegian companies have such a strong interest in entering or deepening their presence in the Australian market?
Australia has experienced a massive boom over the past decade, characterized by the impressive number of USD 200 billion recently invested in offshore oil and gas projects. Only a few years ago, looking at capital expenditure around the world, Brazil was in first position, Norway was ranked in second position followed by the gulf of Mexico and Australia. At this precise moment, the entire Norwegian industry was concentrating its efforts in Brazil, but the South American country steadily appears as a particularly tough market for international companies, notably because of stringent local content regulations. These requirements impose an obligation on foreign companies to massively proceed to local structural investments, before being truly able to exploit the country’s resources.
Australia then came up on the map, and the industry realized it was a market with very promising resources, while it also stands as one of the easiest countries to penetrate and to operate a business. First of all, cultural differences between Norway and Australia are quite substantial, but they are relatively easy to understand and don’t require a huge transformation of companies’ business models.
Secondly, it is extremely simple to set up an entity on the Australian market, and business management can quite easily be supervised from abroad. As a matter of fact, among the 50 Norwegian companies operating in Australia, several of them are still conducting business from Norway – and don’t have any important local footprint. Australia doesn’t impose any local content requirements, so although foreign companies are strongly encouraged to establish a local presence, they are not strictly obliged to do so. It makes a huge difference for service providers, as this specificity both eases market entry strategies and tremendously increases Australia’s international attractiveness.
Finally, in only a few years’ time, Australian production capacity increased from five LNG trains to 20+ currently, further enabling Australia’s ambitions to become the largest LNG exporter in the world. Obviously, this massive increase in production scale also requires a larger need for support services, with regard to production optimization for instance. Historically, the Australian context used to mainly revolve around construction expertise, and the current transition toward a production-oriented eco-system also generates a lot of new opportunities.
Has the downturn in commodity prices inhibited this momentum in Australia?
Yes, but not more than anywhere in the world. In comparison, Norway is currently particularly suffering from the price drop, as highlighted by the thousands of job losses that recently hit the local industry.
On the other hand, the current context feeds an increasing demand for market research services, as the Norwegian industry is hungrily screening new business opportunities abroad, as well as new forms of collaborations to exploit these untapped resources. Indisputably, companies have now adopted a wider and more global focus, and Australia can only benefit from this mindset.
Looking at companies entering the Australian market, what are the main pitfalls that should draw the attention of any potential newcomer?
The ability to build trust between both local private and public stakeholders is of the utmost importance here, as Australia is particularly unique for being a “relationship industry”, with a unique emphasis on maintaining the community spirit. This characteristic thus implies that all new entrants really have to build a strong local network to fully unlock their competitive advantage. Although this setting has obviously nothing to do with corruption, the ability to be identified as a trustworthy stakeholder should absolutely not be overlooked by foreign companies that are looking to establish a local footprint.
Moreover, it also urges international companies to more closely work with their business partners and clients. I could relate plenty of stories about international companies, often headed by young engineers that have neglected this cultural aspect, and then were left with no choice but to leave Australia because of the lack of business opportunities. Furthermore, even though a company truly displays the desire to build this required network, it also often needs some help to identify the most strategic partners and to ensure the efforts invested would offer the expected benefits.
What factors motivated you to move from a traditional position within the industry to a more advisor-type role with INTSOK?
I left Norway in 1987 to firstly study and then work abroad, so I have a very robust international experience. Nevertheless, I had for a long time the desire to more closely cooperate with my home country’s industry, and it clearly counted toward my decision to integrate into the INTSOK team.
Secondly, and maybe more importantly, I am also extremely passionate about technology, and I worked for several years as an upstream development technology consultant, notably within Woodside Energy. This position steadily placed me in a connected relationship with my home country, as Norway is by far the best technology development hub in the world for offshore oil and gas products.
As an evidence of this widely-accepted reputation, Norway is often nicknamed the “NASA of the oil and gas industry”, and the amount of resources Norwegian companies invest in technology development is absolutely mind-blowing and way ahead of any other international oil and gas superpowers. Furthermore, Norwegians are extremely efficient in conceiving the development path for transforming innovative ideas into concrete products, despite traditionally conservative nature of the oil and gas industry. As a result, other countries count on Norway to learn and deepen their expertise from a country that can easily be seen as a world-class laboratory for technological development.