1. Knowledge-based (Oil) Clusters
The Future of Extractive Industries in LAC and the role of STI
21 September 2016
Buenos Aires
Amir Sasson, BI, Norwegian Business School

2. Extraction Industries: Two stories
Raw material extraction
Relatively low human capital
Scale economies
Localities blossom and strive
Efficiency gains from
Learning by doing
Importing technology
Export material
Knowledge-based extraction
Relatively high human capital
Reputation
Localities blossom and adjust
Efficiency gains from:
The above and applying technology through exploring solutions
Export material and solutions

3. Currently
Called for
Logic
Export
Transformation
Raw material
Problem-solving
Solutions
Keyword
Size
Reputation
Location
Access to…
Next to…
Assets
Physical assets
Knowledge assets
Industry connection
Your output=my input
Referral and subcontracting
Industry relations
Divide and conquer
Invite and maintain
Interdependence
Sequential
Cyclical

4. A different story: Ekofisk as an example

5. A simple exercise Expected recovery at ca. 1971: 17%
Today (not final): >50%
In terms of oil barrels the difference is 1905m or for USD 50 price, USD 95.2 billions or USD 20,000 per inhabitant.
The story: “Norwegian participation was limited. [..] Engineering and procurement was mainly performed in London, and besides construction of the Ekofisk storage tank and some verification work by Det Norske Veritas, very little activity took place in Norway.” (Hagen 2001)

6. Field building and innovation go hand in hand
Sources: Adapted from Ministry of Petroleum and Energy (2010) and Fjose et al. (2010a)

7. The two sides
Licenses and operatorships, 179 entries, increased competition and diversity in the last decade*
Ca. 22,000 employees
The largest exporter.
Supplier industry
Ca. 114,000 employees in 2500 firms.
Second largest exporter.

8. ‘Forthcoming’ Business
Knowledge based
Change driven
Global
Environmentally robust

9. Understanding Competitiveness
How can we develop value creating economic activities in countries or regions where manufacturing is disappearing and cost level is very high?

10. Beauty contest
Nations and regions compete to be the most attractive locations for the establishment of knowledge intensive industries

11. The Emerald Model Knowledge Dynamics Cluster Attractiveness
Environmental
Attractiveness
Cluster Attractiveness
Ownership
Attractiveness
Educational
Attractiveness
R&D and Innovation
Attractiveness
Talent
Attractiveness

12. The Emerald Model Knowledge Dynamics Cluster Attractiveness
Environmental
Attractiveness
Cluster Attractiveness
Ownership
Attractiveness
Educational
Attractiveness
R&D and Innovation
Attractiveness
Talent
Attractiveness

13. Cluster Attractiveness
How large is the cluster?
To what extent does it add value?
Is it complete?
Does it indicate specialization (Regionally, Nationally, Internationally)
How much does it export?
Is it productive (e.g., Value creation/Employee)?

14. (Supply of knowledge workers)
Do cluster specific educational programs exist?
Do they attract more students at vocational, undergraduate, and graduate levels?
Do they attract more foreign students?

15. Talent Attractiveness
Do firms manage to attract high skilled employees (e.g., Engineers, Scientists and PhD)?
And Skilled foreign workers?
Does the media assist? Industry Sexiness.

16. (Cluster knowledge production)
Cluster specific researchers
Cluster specific foreign researchers
R&D investments
R&D output (Publications, Patents)
Innovation output (Products, Services, Markets)
Innovation content (New products/Total sales)

17. (Cluster competent capital)
Local competent owners.
Cluster serial entrepreneurship
Is foreign ownership so bad?

18. Environmental Attractiveness
Emissions and pollutants
Total energy usage (CO2)
Proportion of renewable energy
Environmental investments
Environmental technology
Industry specific measures

19. Knowledge Dynamics Employee Mobility between firms
Knowledge Linkages between firms (in innovation and internationalization)
Knowledge Linkages with institutions
Cooperative Networks: Alliances

20. Offshore Oil & Gas Knowledge Dynamics Cluster Attractiveness
Environmental
Attractiveness
Cluster Attractiveness
Ownership
Attractiveness
Educational
Attractiveness
R&D and Innovation
Attractiveness
Talent
Attractiveness

21. Drilling Technology 21

22. Tourism Knowledge Dynamics Cluster Attractiveness Environmental
Ownership
Attractiveness
Educational
Attractiveness
R&D and Innovation
Attractiveness
Talent
Attractiveness

23. Policy Implications
Geographical areas host the occupants of hives. If the conditions are not attractive, they fly away or even worse, never visit.
Areas or firms will find it cumbersome to excel in isolation.
Distributed knowledge.
Knowledge dynamics/NCEs.
Government action
Coordinated Strategic Thrust
Broaden the public sphere which will create better conditions for knowledge-based economic development.
Define the problem, let firms create solutions
Coordinated, predictable and transparent decision making

24. Oil/other
Wealth
Investment
Knowledge

25. Feedback and change A dynamic system More recent revisions of
Competition
Exploration: 30 to 70 new players since 2000
300% increase in wildcat exploration drilling
Sources of income
Tax stimuli
Licensing
Exploration areas