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Interview

with Stein Inge Liasjø, Country Manager, Aker Solutions China

24.05.2012 / Energyboardroom

Mr. Liasjo, you are perhaps the first oil & gas country manager that we have met that has a working history not in a field like operations or engineering, but rather in communications and finance. You have served as a communications executive both for Aker and a leading Nordic insurance company. What led you to your present role?

I started in the banking industry, I was selected for a position in communications at Gjensidige NOR—the bank and insurance company you have mentioned. My educational background is in finance and media science. Then after a few years in different roles in communications with Aker Solutions, I moved on to take a position as CFO with one of the subsidiaries in Aker Solutions. I gradually gained more responsibility, not only as a staff function, overhead type of experience. Then I was fortunate enough to be chosen for this opportunity in China.

How challenging was it to adapt to the position of country manager?

I had a year as vice-president in China and I spent this time learning what I needed to know in order to fill this role. Having that time of transition helped me a lot. The important things are good understanding of our business, good communication skills and a strong common sense.

You are relatively new to the Chinese market, what are your impressions of it? What are the needs of the market and how are they complimented by Western companies such as Aker Solutions?

Many of the future development challenges in China are related to deepwater, and this is an area where Norwegian technology has been developing for 40 years. The Norwegian and UK continental shelf is the largest offshore market in the world. There are great benefits that Western companies can bring to China, both on the knowledge side and the technology side. It is specific to two areas; firstly the developments in the South China Sea, which for the moment are in quite shallow water, but the future ones will be in deeper waters. There is also the potential to assist our Chinese clients as they go abroad. They have been investing heavily in oilfields around the world; many of those are also in deeper waters where our type of competence comes into play.

China has been described by several other country managers as less of a market in of itself, and more of a strategic hub for business development—a place to form relationships with some of the leading oil & gas companies in the world, in order to leverage those relationships in more energy-rich third markets. Would you agree with this view of China?

I would describe it somewhat differently; we see China Inc. as growing in importance as a client, as a partner, and also as a supplier. Taking a holistic view of the whole value chain, we see interfaces with China Inc. in all areas.

We see the three state oil companies as clients. Consequently, China itself is an important market, both for engineering and our equipment deliveries and also for our service deliveries. In addition, we see the Chinese companies as interesting partners domestically as well as for going for the international markets. We have also formed strong relationships with Chinese vendors to complement our needs both here and abroad.

In 2010, Aker Solutions signed its first subsea production system contract with CNOOC, marking a successful entry into China’s subsea market and capitalizing on Aker Solutions’ high-tech manufacturing facility in Port Klang. How have your subsea activities in China developed from that milestone, and what growth opportunities do you anticipate?

Subsea is definitely an area in which China is an increasingly attractive market. However, it takes time. These developments need to mature.

Now we are seeing new tenders and new projects coming, and we do expect this area of the market to continue growing, albeit somewhat gradually.

According to the goals set by the government for the oil and gas industry, the authorities do not seem to want the market to take its time—they would prefer this sector to progress as fast as possible. Is this reality indicative of a trend in China whereby progress is not made at the targeted rate?

I do not think so. Oil companies are fulfilling the goals by further developing existing producing fields in order to increase production. At the same time, they are turning their attention to newer frontiers.

I have no reason to doubt that China will reach its energy targets—although obviously the government is in the best position to make that judgment.

In addition to working with CNOOC, Aker Solutions has won recent contracts from private Chinese players such as Yantai CIMC Raffles Offshore Ltd and Honghua Group. Do you see the private sector in China rising to increasingly collaborate with MNCs such as Aker Solutions? What do you think each party brings to the table?

It is important to remember that Aker Solutions is not a single entity focusing on one type of client. Sometimes we work towards yards, sometimes we work directly towards oil companies, etc.

We have been working all these angles continuously and there is nothing new in that. Historically, in China Aker Solutions has been working with international companies for the most part in the process industry and chemical sectors, assisting them in building their facilities.

Last year, we sold off the downstream part of the business to an American company, Jacobs Engineering. We have also done engineering projects for CNOOC and the other state-owned oil companies. We deliver equipment both to oil companies and yards. For instance we delivered the complete drilling package for the first domestic deepwater rig in China, and that rig is now in operation in the South China Sea.

Was the decision to sell off the downstream business to Jacobs a global move to focus on upstream, or was it China-specific?

The decision was not China-specific.

The deal was intended to refocus the company as an oil service provider, concentrating on the three main areas within Aker Solutions, which are Engineering, Technology and Products, and Service deliveries. In that respect, we are a more focused upstream service provider.

What is the importance of China for the group globally?

We have growth aspirations for our Chinese presence and we are looking to grow all three of the areas mentioned. Historically, we came from a downstream set-up and over the last three or four years we have gradually shifted to the upstream. That trend will continue and it is our definite ambition to grow in all of these areas.

We are one of the few key players in subsea and we expect to take our share of the market here. Another key area is drilling technology, with the Chinese yards becoming increasingly important in making the world’s drilling rigs. We expect to take our share of that market.

What challenges will you face over the next five years?

One is related to competence and how to develop our skill sets to suit the requirements of this market. The offshore industry here is still not huge; consequently there is not a vast existing resource pool to draw from, although there is beginning to be a lot of new graduates as well as an increasing competent resource pool.

As a consequence, are you providing training programs or are you obliged to bring in a lot of expats?

This is one of the things we have to take into consideration—we cannot bring in an army of expats as it is too expensive and it does not fulfill our long term goals. We want to be a local organization, however, we do need skills and experience from Norway and elsewhere that we have built up over the last 40 years. We need new graduates and experienced people of different nationalities and backgrounds. We want to have a balanced structure.

How do domestic stakeholders perceive Aker Solutions and how would you like to be perceived?

We would like to be, and to a large extent are already seen as, a technology-driven company. Coming from one of the biggest offshore markets and having four decades of developing these resources, this resonates well with the Chinese oil companies.

What is your final message to the readers of Oil and Gas financial journal?

Aker Solutions is a Norwegian company with a Norwegian heritage. However, we are gradually moving to erase those boundaries and become strictly an oil and gas company, rather than a national company. Aker Solutions is on its way to being recognized as a true global player in this market, and that is what we want to be.

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