Equinor’s four-year drilling contract extensions to secure thousands of energy jobs

The jobs of 2,000 energy workers will be maintained moving forward after Norwegian oil and gas giant Equinor exercised options to extend contracts on behalf of its partners.

The contracts are with Archer AS, KCA Deutag Drilling Norway AS, and Odfjell Operations AS and cover a total of four years. The options are for drilling services on fixed installations on the Norwegian continental shelf - providing jobs for 2,000 people per year - and have an estimated value of NOK 18.4 billion ($1.7 billion).

Confidence in trusted suppliers

Signed in 2018, the contracts were with three option periods of two years with the first two-year option exercised in 2022. The new contract period runs for four years from October 1 this year.

Mette H. Ottøy, Equinor’s Chief Procurement Officer, said the company appreciated “the good collaboration” it has had with the suppliers for many and had, therefore, added a fourth option of two years in addition to those agreed in the original contracts.

“This will help ensure predictability and form the basis for continuous improvements over time,” she said. “This is a clear signal that we have long-term plans for cooperation with all three suppliers.”

Options decision brings more jobs to region

During this option round, Equinor conducted a limited competition evaluating drilling suppliers on certain fixed installations, based on a combination of technical and commercial criteria. This, in turn, resulted in some redistribution between the suppliers on four of the 19 installations in the contract portfolios.

Services delivered by them to Equinor are drilling, completion, intervention services, plugging, maintenance and modifications on 19 of the operator’s fixed installations. The suppliers also receive support from sub-contractors for some of the services mentioned, generating additional jobs along the Norwegian coast.

Continuity generates safety boost and efficiencies

Erik G. Kirkemo, Senior VP for Drilling & Well Operations, added: “We know these suppliers well, and look forward to continued collaboration about safety improvements, energy management and operational efficiency. Through the various improvement activities we aim to maintain the drilling activity on our fixed installations for many years to come.”

The drilling contracts cover the following installations and fields, with appointed contractors in brackets: Grane, Johan Sverdrup and Visund (Odfjell); Gullfaks A, B & C, Sleipner A, Snorre A & B and Statfjord A, B & C (Archer); Heidrun, Kvitebjørn, Njord and Oseberg B, C, Sør & Øst (KCAD).

With 22,000 employees in 30 countries, Equinor is the largest operator on the Norwegian continental shelf, handling 60% of total production.