Oslo-listed contractors BW Offshore and Kvaerner are implementing financial and other measures to mitigate the impact of the Covid-19 virus pandemic on their balance sheets and operations.
Floating production, storage and offloading vessel contractor BW is deferring around $60 million in expenditure planned for its inactive fleet next year.
The company has also bolstered its backlog with the award of a firm five-year contract with MP Gulf of Mexico, a joint venture of Petrobras and Murphy Oil, for its BW Pioneer FPSO on the Cascade and Chinook fields in the US Gulf that is set to add $350 million to earnings over the period, according to chief executive Marco Beenan.
BW, which has had 100% uptime on its active FPSOs so far this year, has also set up a task force to maintain safe fleet operations by optimising manning, retaining offshore crews in country to ensure uninterrupted work amid international travel bans, implementing medical and evacuation protocols, and stocking of vital provisions.
These steps are alongside other standard measures such as social distancing and home working for onshore employees to prevent the spread of the virus.
Voluntary pay cut
Kvaerner chief executive Karl-Petter Loken has agreed to take a 10% cut in his annual salary to support the engineering and fabrication contractor, which is also urging shareholders to reject a proposed dividend payout at its upcoming annual general meeting on 24 March.
Its executive management team subsequently has agreed to a salary reduction of 5% from 1 April, while both Loken and his team have decided to cancel pay rises this year, resulting in a 40% cut in earnings for each executive compared with last year.*
The company said in a statement it has “a robust financial platform and a very good foundation to handle the current global situation with the least possible disruption to our operations”.
Kvaerner stated it “is implementing precautions to minimise as much as possible any negative influence of the virus situation for ongoing projects and for future business opportunities”.
It has also decided to donate a total of Nkr10 million ($831,000) to local authorities in Stord and Verdal, where its yards are located, to support the medical fight against the virus, while also donating face masks and coveralls to hospital staff.
There was, however, no word from the contractor on possible lay-offs or redundancies, although it has repatriated a total of 1220 foreign hired-in workers from the two yards due to quarantine requirements.
Similarly, rival Aibel is sending home 420 foreign contract workers from its Haugesund yard in western Norway, having had several confirmed cases of the coronavirus who have been infected abroad and have not had contact with the rest of its workforce since returning to Norway.
The downmanning effort by both contractors, coupled with work restrictions due to the virus, could though have an impact on ongoing fabrication projects.
Aibel is mainly working on the topsides of a new processing platform for phase two of Equinor’s Johan Sverdrup field development, while Kvaerner is building the jacket for the same facility as well as a new module for the project’s existing riser platform.
The latter contractor is also engaged in fabrication of topside modules for the Johan Castberg FPSO for Equinor and the upgrade of the Njord A platform for the Norwegian state-controlled operator.
A Kvaerner spokesman confirmed to Upstream “there have been no lay-offs”, adding the contractor had no confirmed cases of the virus though several employees had been in quarantine following trips abroad.
He said the company had been proactive in implementing hygiene and other measures such as reduced meetings and international travel.
“We are now working in close dialogue with our clients to see how we can work with ongoing projects with our own personnel and whether we can redistribute tasks within the organisation until the crisis is over,” he said.
An Aibel spokeswoman said it was “too early to say” how the reduction in workforce would impact ongoing projects and that it was in "close dialogue" with major client Equinor.
(*Editorial note: this article has been updated to include a subsequent announcement of salary reductions for Kvaerner's executive management team).