In 2019 Equinor purchased goods and services worth NOK 161.6 billion from more than 9,000 suppliers globally. NOK 113 billion, i.e. 70% of total purchases, went to suppliers with a Norwegian billing address.
“A competitive supply industry is highly important for Norway and for Equinor. During the last years we have seen a steady growth in the Norwegian content of our total procurement: from 61% in 2017, to 67% in 2018 and to 70% in 2019. This is a recognition of the good work done by the Norwegian suppliers to respond to the tough transition in the energy sector in recent years,” says Peggy Krantz-Underland, Equinor’s chief procurement officer.
Equinor’s total procurements increased from NOK 141.7 billion to NOK 161.6 billion from 2018 to 2019. This is related to the high project activity, increased exploration and new fields in production in the company.
In 2019, five Equinor operated fields were put in production, including the giant Johan Sverdrup field on the Norwegian continental shelf and the Mariner field on the UK continental shelf.
Equinor is investing in a world-class project portfolio coming on stream towards 2026, representing 6 billion barrels to the company. Also, in the renewables business, the project activity will increase during the next years as the Dogger Bank and Empire Wind projects are being matured. These projects open new opportunities for the supply industry in Norway and internationally.
The high activity makes it is even more important to focus on costs, quality and efficiency and to safeguard the good improvements achieved by the industry. This will allow to stay resilient through cycles and take advantage of new opportunities.
“During the last years we have achieved important efficiency gains together with suppliers. We have transformed our cost base, our drilling performance and how we develop projects. This has enabled Equinor to progress and sanction new projects in a challenging downturn period, awarding contracts and giving jobs to our suppliers and sub-suppliers. The industry will continue to be cyclical and volatile. To minimise the cycles, we should aim for a stable and predictable activity and a sustainable cost level,” says Equinor’s executive vice president for Technology, Projects and Drilling, Anders Opedal.
Equinor is exploring new ways of working with suppliers to withstand market volatility, increase efficiency and ensure sustainable margins.
Particularly within project development, early engagement of key suppliers is increasingly a preferred approach. This enables concept optimisation and robust execution planning, and it offers suppliers an opportunity to assume a greater role in overall value creation.
A lot of focus is made on working with suppliers in more integrated ways, as one team, to eliminate waste embedded in interfaces, empower suppliers and increase their responsibility. An important measure is introduction of new incentive schemes in the agreements that reward safe and effective deliveries.
“Going forward we will work even closer with the best suppliers to demonstrate that safety, efficiency, quality and costs can go hand in hand. Our aim is to create value together with suppliers and find win-win solutions for all parties involved,” says Krantz-Underland.