Germany and Norway: Technology synergy for the energy sector
Germany and Norway have a historical relationship that has proven to be mutually beneficial throughout the years. Around 100 years ago, Germany supported Norway in the development of coal mines, the glass industry, and the use of water energy. In the present, the political cooperation between these countries is effective, the economic situation is stable, and they share similarities in culture and language. Such positive characteristics have fostered bilateral economic relations. “The imports and exports between Germany and Norway amount to EUR 25 billion per year and commerce has been stable for the last 7 years. Norway’s main export to Germany is energy,” says Norbert Pestka. He joined the organization in 2008 and believes in the appeal of the Norwegian market. In addition to oil and gas, Norway’s main exports are fish and chemical products as well as aluminum products for the German automotive industry. Overall, Norway’s total exports to Germany amount to roughly EUR 17 billion.
On the other hand, Norway’s imports from Germany, with the worth of EUR 8 billion, include motor vehicles, machinery, and technologies, as well as chemical and pharmaceutical products. “Norway is a leading country when it comes to oil and gas technologies, but it is not well known that a significant amount of the equipment needed for global oil and gas activities comes from Germany,” says N. Pestka. “Norway is importing, finetuning, and upgrading the equipment to sell it in the global market,” he adds.
The German-Norwegian Chamber of Commerce sees the oil and gas sector as the most promising field in this relationship and N. Pestka is optimistic about the industry’s future. “There might be people who believe that the oil and gas sector has no future, but as long as there is global growth, there will be a demand oil and gas,” says N. Pestka. “In addition to wind energy, which has gained popularity in Germany in recent years, we still need other resources,” adds N. Pestka. Norwegians play a crucial role as energy suppliers because Germany imports 30% of its gas from Norway and another 30% from Russia.
Low global oil prices pose a considerable challenge for Germany and Norway and both countries have taken measures to address the current situation. The Managing Director elaborates on the measures taken by German companies that are active in the Norwegian oil and gas market, for example, Wintershall, DEA, VNG, and Bayerngas. “All these companies follow the same trend and focus heavily on cost-reduction strategies. They have reduced the number of employees and developed new technologies to become more competitive than other countries,” says N. Pestka. Although market prices have not returned to previous levels, these measures have allowed companies to successfully increase their efficiency compared to the situation two years ago.
Germany offers flexibility, technology, and strategic support to Norway, which is an attractive market because economic and political risks are considerably lower than in other oil and gas countries, making German companies eager to invest. In addition, Germany has the capability to provide new technology to Norwegian oil and gas companies and its suppliers. “In Germany, companies such as Siemens are developing innovative technologies for the oil and gas sector to strengthen the business and increase competitiveness,” states N. Pestka. “The break-even point has fallen significantly which is essential because the profitability of Norwegian oil fields has decreased substantially in recent years,” adds N. Pestka. While the break-even point is different in every country, the German-Norwegian Chamber of Commerce views Norway as a crucial market for leading German oil and gas companies.
The role of the German-Norwegian Chamber of Commerce is to support the industry by providing a network that strengthens cooperation between the countries. “We are a representative body of the German economy in Norway, a membership organization, and a service provider at the same time,” says N. Pestka. “We defend the interests of German companies in Norway and we provide them with a network of more than 750 member companies and we help them enter the market,” he adds. The foreign chamber, the AHK, is a strong brand that is well-known in the German industry and it has gathered considerable knowledge and expertise in foreign markets. The AHK identifies branches of the economy with potential for bilateral economic relations in each respective country and provide support to the concerning industrial sectors.
Some examples of the work of the German-Norwegian Chamber of Commerce include tax advice, legal support, and market information. The Managing Director comments on the scope of the organization’s services. “We have the capabilities to provide advisory support to German oil and gas suppliers operating on the coast off Stavanger and new companies entering the market,” says N. Pestka. “In addition, we have members from a variety of branches, which means that we are in constant contact with a large majority of, for example, oil and gas companies, suppliers, and global competitors,” adds N. Pestka. These are some examples of the advantages of being a member of the German-Norwegian Chamber of Commerce.
The main objective of the German-Norwegian Chamber of Commerce is to create synergies between suitable partners within its network. Moreover, the organization is constantly looking for opportunities and capable players to expand its network and bring such companies to Norway and vice-versa, aiming to further strengthen the bilateral relationship.
Apart from oil and gas, other fields have substantial potential for bilateral cooperation and the German-Norwegian Chamber of Commerce is keen on enhancing business relationships. “The Norwegian Government has requested support to reindustrialize and digitize various industries and to promote cluster cooperation between Germany and Norway,” says N. Pestka. “As a networker, the German-Norwegian Chamber of Commerce can bring these clusters together,” he adds. A reindustrialization process of Norway has been observed in the oil and gas industry during the down-cycle.
Regarding the power generation sector, the NordLink subsea HVDC power cable will improve energy transmission between Norway and Germany and the project is expected to be concluded by 2019. “The German-Norwegian Chamber of Commerce is well acquainted with German companies and proposes suitable partners to participate in such important projects,” says N. Pestka. Additionally, the economic ties between these two countries will be strengthened through a future maritime project in which Germany will act as a provider of submarines. “We will be involved in making industry upgrades and German suppliers will need support from both countries. The German-Norwegian Chamber of Commerce and Innovation Norway will act as partners to ensure the best possible use of opportunities,” adds N. Pestka.
One of Germany’s current priorities is to secure the resources needed to meet its energy demands. “It is important to determine who the most competitive supplier is; therefore, we compare Norway and Russia. Germany aims to strengthen its relationship with Norway and see it as a strong partner in gas trade due to the positive political relationship between the countries. “Considering the changes in the government, we are committed to ensuring stability of the fiscal conditions for oil and gas companies in Norway,” says N. Pestka. “We are witnessing the development of a robust European energy network and, as it continues to grow, we are bound to increasingly rely on Norway to fulfill our energy needs. This is a great opportunity for both countries,” concludes N. Pestka.