The outcome of the first Norwegian offshore wind auction may have been determined by non-financial elements, says KPMG advisor.

“My guess is that non-financial elements impacted the Sørlige Nordsjø II auction. The numbers just don’t add up,” says Kurt Ove Østrem, Partner Deal Advisory at KPMG Norway.

He spoke at the GCE NODE Top Leader Forum in Kristiansand Thursday evening.

Østrem says IKEA’s ambitions for energy production is likely to have played a role, pushing Parkwind and the Ventyr consortium to enter the lowest bid. IKEA is determined to produce more energy than it consumes. And speculations are that the Swedish home furnisher is willing to pay more than market price to make it happen.

KPMG’s own calculations indicate that the best-case financial scenario for Sørlige Nordsjø II is close to break even. In other scenarios, Ventyr stands to lose billions during the lifetime of the wind farm.

“We were surprised to see bidding at all for the Sørlige Nordsjø II project, since it is very hard to make money in offshore wind right now. The industry is currently in a three-way squeeze with higher interest rates, supply chain inflation, and the expectation that power prices will drop in years to come,” says Østrem.

Returning to the idea that Ventyr included non-financial elements in their bid process, Østrem emphasizes that he is not certain of this.

“Ventyr could have a better feel for the actual cost after building a similar wind farm outside Germany. They could have a better understanding of component pricing and how to build faster and cheaper. And they may be willing to except lower return on investment. We don’t know for sure. Maybe they will tell us later,” says Østrem.

Kyrre Haugen is the General Manager at the Norwegian-British Chamber of Commerce, a network of public and private organizations that promote Norwegian businesses.
Hans Ragnar Berg, Partner at Deloitte CFO Services Norway talked about how keep your workforce happy and motivated.
75 people attended the GCE NODE Top Leader Forum in Kristiansand Thursday evening.

Pål Skogerbø was elected Chairperson of the GCE NODE Board of Directors at the Annual General Meeting in Kristiansand Thursday night.

Skogerbø replaces NOV Norway boss Rune Johnsen, who will continue as Board Member.

Other board members include Sunniva Whittaker (University of Agder), Ingvar Apeland (AS Nymo), Kristin Dale (Å Energi), Kjetil Kleven (Firenor), and Siren Neset (NORCE).

The AGM was held at Klubben in Kristiansand, where CEO Tom Fidjeland presented the GCE NODE annual report and GCE NODE finances. In 2023, total revenues amounted to NOK 23 million. The financial result came in at close to NOK 1 million.

At year-end, GCE NODE had 128 cluster participants.

The annual meeting increased the minimum participation fee from NOK 25,000 to NOK 30,000. The maximum participation fee was increased from NOK 150,000 to NOK 180,000. The fee for start-ups remained unchanged at NOK 5,000.

15 FPSO suppliers and GCE NODE participants came together for what will be considered the first meeting of a brand new GCE NODE FPSO forum.

An FPSO is a Floating Production, Storage and Offloading unit, and typically comes in the shape of a ship or a platform. A large number of GCE NODE participant are suppliers to FPSOs.

“I regularly meet other GCE NODE companies at FPSO events, but we are rarely there as competitors. Thus, it seems only natural to share contacts and experiences to better succeed in the FPSO market,” says Kjetil Kleven, CEO of Firenor.

THE IDEA OF A FORUM
Together with Maritime Protection, he pitched the idea of a GCE NODE FPSO forum, parallel to other GCE NODE initiatives to promote and coordinate the efforts of cluster participants. On Wednesday, GCE NODE called a meeting to gauge interest.

“I think we were all surprised by the turnout. Moving forward, we will definitely make FPSO a regular feature on the GCE NODE agenda,” says Bjørn Saltermark, Project Manager at GCE NODE.

The next FPSO forum is already scheduled as a physical meeting in September.

“Similar forums in other segments have proven to be both valuable and lucrative for forum participants,” says Saltermark.

HUGE AND TRANSPARENT
During the digital meeting, Norwegian Energy Partner (NORWEP) advisor Henrik Jorkjen addressed the FPSO market, characterizing it as both huge and transparent.

“Right now, the global FPSO pipeline consists of 63 units. There is, however, capacity to build only 8 to 10 FPSOs every year. We expect building of FPSOs to be a steady business in years to come,” said Jorkjen.

23 of the 63 units are ordered from companies in South America (16 alone in Brazil). Another 17 are ordered from West-Africa, 10 from Asia, and 6 from Europe.

“FPSOs are increasingly costly, due to high demand for high-tech, low-emission units. Some are already equipped with Carbon Capture and Storage equipment,” said Jorkjen.

Development of FPSO is typically centered around Houston, Singapore, Norway, Monaco, and the Netherlands. Construction is done in China, Singapore, Dubai, and Korea.