1. Some Perspectives of the Norwegian Oil and Gas Clusters. Jacob Sannes Director, Statoil do Brasil Ltda. Some Norwegian experiences that could be applicable in Brazil. NOT AN OFFICIAL UNCTAD RECORD

2. What is a cluster. 4Clusters were not ”invented” by Michael Porter but his work in the early 90-ies established the term for common use. 4Porter defined clusters as a location where 4 Cost and quality of inputs 4 Nature and intensity of local competition 4 Sophistication of local customers, and 4 Presence of related industries 4interact to create dynamics which innovate, boost productivity and attract new industry to that location. 4Porter stated that success is greatest where competition is strongest and peer companies compete to be best but also have constructive co-operation.

3. Some examples. 4Italian shoes 4Hollywood films 4Broadway and London Theatres 4Detroit cars 4Silicon Valley IT 4Madison Avenue advertising agencies 4Houston and Norwegian Oil and Gas Industry.

4. Clusters must develop 4Productivity and technology may out-compete the advantages of a cluster 4 Heavy shipbuilding moved from Europe and USA to take advantage of higher productivity in Japan 4 Steel production moved from proximity to iron and coal in Europe and USA as combination of productivity and new technology in Japan plus cheaper bulk transport developed 4In some cases, new clusters develop from the ruins 4 Specialist shipbuilding in Europe but not USA 4 Specialist quality steel production

5. Norway’s goals and strategies - 4The petroleum resources belong to the nation 4Development of the resources must benefit the society as a whole 4The goals and strategies: 4 National involvement 4 Resource management 4 Technology and competence

6. Transforming the society Developing the necessary knowledge 4Build competence 4 Adapting the education system 4 Focusing on training and developing employees 4 Stimulating students 4Transform existing industries 4 Maritime 4 Mining 4 Process 4Maintain a balance between oil and non-oil sectors

7. Strengthening the competitiveness of the energy service industry 4Structure projects according to national capabilities 4Develop technology in joint projects 4Inform 4Educate 4De-brief 4Help with advice

8. Balancing Competition and Co-operation 4Successful clusters are invigorated by strong competition, very often ”personal” and driven by strong individual’s desire to show who is best. 4Inside successful clusters there is recognition that some issues are best solved through collective actions. 4The Norwegian society traditionally works towards solving issues through co-operation, and this has helped in establishing the Norwegian Oil and Gas cluster. 4To sustain any cluster its members must develop a mode of co-operation whilst maintaining competition.

9. The Norwegian co-operation model Govern- ment and Authorities Oil companies Contracting and supply industry Employees and Labour Unions

10. A large oil and gas producer Norway has celebrated 30 years of production 4A large producer – and exporter – of oil and gas 4Oil and gas revenues represents 20% of Norway’s GDP 4A strong and capable domestic support industry – now going international

11. Improved recovery and reservoir management Field 1996 2000 Target Statfjord Gullfaks Achieved recovery factors 1986 61.4%65.6%68% 49.4%54.5%62% 49.4% 46.5%

12. Supplier Development Programme GOALS 1.Bring new technology to market 2.Establish new possibilities for the industry 3.Availability of new products, giving Statoil reduced cost, environmental profit, and increased safety STATOILS CONTRIBUTION 1.Define user requirements 2.Technical competence 3.Project control 4.Establish contacts 5.Advising PROJECT STATUS LUP - 2000

13. Principles applied in the Development of a Norwegian Oil & Gas Industry 4Focus on development of a supply industry sustainable on a long term basis 4Contractors to be selected on a transparent, non- discriminatory manner, securing best value for money 4Technical solutions and contract management structure that accommodates domestic supply industry 4A proactive information policy towards domestic supply industry

14. Norwegian Oil & Gas “World-Class” Clusters Around 80.000 directly employed in sector Oil Companies Main Contractors System Integrators Product Suppliers Service Companies TYPE OF COMPANY Reservoir/ Seismic Offshore Drilling equipment Down-hole and Well Services SubseaPlatforms/fixed/floatersDecomis- sioning Field oper- ations and transporta- tion Subsea Down-hole and Well Services Drilling equipment Equipment and Models Reservoir and Seismic Drilling Design and Project Manage- ment E, I&T Marine Equipment MMO, Transpor- tation Offshore Supply Operator/ Duty holder Decom Emerging ClustersEstablished Clusters Supply Chain Value Chain

15. A sustainable future for Norway? 4Fewer discoveries and developments in Norway will shift industry focus towards operational challenges and internationalisation 4Many Norwegian companies already co-operate with local industry in other countries, using their capital and technology to develop competitive local companies 4Statoil strongly believes that supporting local industry to become competent and competitive will bring benefits to Statoil, the oil and gas industry and the host country later

16. And for Brazil? 4Brazil already has a nucleus of an oil and gas cluster in Rio/Niteroi and a number of competent companies in related areas 4Brazil has strong universities offering higher education in all relevant areas 4Brazil has strong industry associations and are used to establishing industry-wide development programs 4Brazil has a strong national champion for the development of a competitive national industry

17. Going forward 4I believe Brazil is in a unique position to develop a national oil and gas cluster 4But this will require a long-term view from all engaged 4 Federal and State government and authorities 4 Financing institutions 4 Employees and unions 4 Contractors and service industries 4 Oil and gas companies 4which must all understand the potential benefits from co- operating whilst being internationally competitive. 4I hope Statoil may be part of this challenging development