Aker Solutions Braces for Layoffs in Statoil Shakeup

Norwegian oil services company Aker Solutions has been the main provider of modification and maintenance for Statoil's offshore infrastructure in the North Sea. Its contract expires in summer 2016, and Statoil has not renewed it, preferring instead to award work to a set of five companies. Aker is included in the list, but the main contracts were awarded to Aibel, Apply Sorco, Reinertsen, and Wood Group Mustang Norway. 

Statoil gave Aker's Norway team its top score in satisfaction with suppliers the last two quarters, said Aker CEO Luis Araujo, but the performance and Aker's "very strong and commercially sharp bid" was not enough to persuade Statoil. 

“We’re disappointed by the outcome of this bid process, which was on terms similar to those of other MMO contracts that we’ve secured recently in Norway, the UK and Canada. Now we have to evaluate the consequences of this latest development," Araujo said. 

The contract loss means a revenue reduction of about $60 million after the expiration of the current contract, and Aker suggests that this will have implications for workforce size. 

“We expect to have to reduce the number of MMO locations in Norway and will provide more information when we have evaluated the overall situation," Araujo said.

Since 2014, the company has cut 750 permanent positions in order to bring the size of the company into line with declining demand. Aker has about 16,000 employees worldwide, with about a third in maintenance and modifications (mostly in Norway). The business line represents about half of Aker's international income. 

Aker hopes to offset the decline in North Sea operations with new bids in the U.K. and in Canada.