Vertical Alliance Contracts On The Norwegian Continental Shelf

Abstract

The oil and gas industry on the NCS is on the rise again after a bad period due to the fall in the oil price. This has made the E&P companies realize a need for less costly solutions and a focus on reduced costs on the project lifespan value. With procurements being the most considerable expense to these companies, it is also the greatest source of potential cost reductions. A resurging measure in the attempt to reduce costs on the NCS is alliance contracts.

This thesis will investigate whether alliance contracts are a recommended contract format for operators on the NCS, using Wintershall Norge as an example. Vital success factors and company and project characteristics will also be studied. The thesis consists of an evaluation of the advantages and disadvantages with the contract format, an observation of it in regard to the current market situation and a comparison of it in relation to competition law.

It is concluded that alliance contracts could be a favourable tool in the development of an economically healthier industry with regards to the high emphasis on collaboration. However, without the right mindset, motivation and support from upper management, it might not be suited for everybody. It is a contract format demanding active involvement from all participating parties. The long-term effects are not yet mapped, and this makes it harder to understand the impact this contract format could have on the industry. The current interest for it, however, is very present.