Norwegian oil service companies have grown in number and competitive strength as the continental shelf has been developed. Technological innovation driven by the tough North Sea climate has given Norwegian suppliers a competitive edge in international markets.
In 2014, Norwegian oil service businesses generated NOK 195 billion in international sales, according to a report prepared for the Ministry of Petroleum and Energy by Rystad Energy.
However, much unutilised potential remains, which is why Export Credit Norway has put together 12 useful tips for potential oil service exporters.
1. Identify international priority regions
Most oil service businesses cannot afford to invest everywhere. Go for the lowest-hanging fruit first. INTSOK, which markets the Norwegian oil and gas industry abroad, can help match products with existing needs in different foreign markets.
2. Use local experts
Once you have decided on an investment area, assistance with establishing contacts, obtaining market analyses, identifying relevant projects and navigating your target market is easily available.
Marketing, business and technology advisers at Innovation Norway’s foreign offices have the expertise, experience and valuable local networks they need to help you realise international marketing opportunities.
INTSOK has various international offices staffed by experienced advisers with in-depth knowledge of the different markets open to Norwegian oil service businesses. INTSOK’s partner businesses also receive five days’ free services and advice from these advisers.
3. Focus on local marketing
As a well-known marketing maxim states, “All business is local”. Ensure that you market your products and services locally, so that potential customers develop familiarity with and confidence in your specific solution. INTSOK arranges seminars and workshops at which Norwegian companies can present their expertise and technologies to potential customers. INTSOK’s network meetings also provide insight into the experiences of other companies in specific markets, as well as excellent opportunities to develop networks in other countries.
4. Familiarise yourself with the competitive advantages of export financing
The battle for foreign contracts is tough. Often, you will be competing with suppliers from nations with lower cost levels than Norway, and access to capital is frequently a challenge. Arranging favourable financing for customers is one way of ensuring that they can afford to award your business a contract.
Export Credit Norway makes loans to companies that purchase goods and services from Norwegian exporters. Are you wondering how export financing could benefit your business? This film (in Norwegian) explains export financing in two minutes.
5. Consider insurance to reduce credit risk
If you make deliveries on credit, you can insure against the risk of losses due to non-payment. Credit insurance can also be combined with factoring, so that you receive the contract sum upon delivery, even if settlement is scheduled for much later. Many oil businesses appreciate extended credit periods. GIEK Kredittforsikring offers credit insurance for periods of up to two years.
6. Check the import rules in potential target markets
Exporting goods and services can be a minefield if you are unfamiliar with the applicable rules. Many countries have their own rules on import restrictions, sale contracts, product requirements, customs and excise duties, customs clearance, export documentation, transportation requirements, etc.
Familiarise yourself with rules and restrictions before bidding for contracts. Innovation Norway has an excellent library of information on import rules and country information covering some 194 different countries (in Norwegian).
7. Check customs rates in your target market
Winning an export contract is a great triumph, but watching your profit evaporate due to overlooked customs and excise duties is extremely frustrating.
Check the customs rates before bidding for a project. Innovation Norway maintains a comprehensive database (in Norwegian) of applicable customs and excise duties, general and special documentation requirements, import licence requirements for specified goods, current quotas and other import rules.
8. Check country risk
Although many countries are virtually risk-free export destinations, others present challenges. Advisers from Export Credit Norway and GIEK can assist with the evaluation of country risk.
A country assessment focuses on the overall payment risk associated with a given country. The assessment covers economic and political factors which may affect a country’s ability and willingness to respect international payment obligations, such as currency shortages, war, civil war, expropriation, payment stoppages, transfer barriers and trade restrictions (import or export bans). The assessment also examines other factors which affect a country’s ability to pay, particularly its economic development in a broader sense.
GIEK and the OECD have cooperated on the development of an econometric model used to assess around 140 countries. GIEK’s risk assessments are available on its website.
9. Run background checks
Many countries are less transparent than Norway, so always carry out background checks on any local partners and representatives.
INTSOK provides anti-corruption advice and support. Its partners are also offered up to one day’s free legal advice on corruption issues. INTSOK can assist with legal background checks of local sales representatives.
10. Check whether you can use the simplified export financing application procedure
Once you have identified a potential project and concluded that you want to offer the potential customer financing in addition to your goods or services, you should check whether the project qualifies for the simplified application procedure.
GIEK and Export Credit Norway have introduced a simplified application procedure for all exporters wishing to conclude export contracts valued at less than NOK 100 million – one joint application form, one joint offer. Securing your export contract has become easier. We call this “robust financing made simpler”.
11. Apply for financing before you sign a contract
Export financing is only available if you apply before the contract is signed.
To help exporters understand the export financing process, Export Credit Norway has prepared a simple overview presenting six steps to export financing .
Export Credit Norway’s advisers will guide you safely through the various steps, and hopefully to a lucrative export contract for your business.
12. Avoid cultural misunderstandings
Friendly shoulder slaps and tossing business cards across the table often help to break the ice in Norway. People from other countries may well express themselves differently.
Be aware of cultural norms in your target country, and respect these. Doing so will make winning a contract far easier.
Extensive information is available on this subject. If you want to be particularly well prepared, why not attend one of INTSOK’s cultural awareness courses? INTSOK also runs presentation skills workshops to promote appropriate and effective communication to international audiences.