Internal Analysis

10.1 Analysis of resources 

10.1.1 Tangible resources 

10.1.1.1 Financial resources 

Even though Sevan’s financial state is improving, their financial resources are still very limited. The weak financial state of the company will heavily influence Sevan Marines borrowing capacity, and thereby their ability to finance the construction of new rigs. Sevan Marine is therefore dependant on investors in order to finance construction of a new rig. In order to attract investors, Sevan would need to be in possession of a contract with a client, thus securing

forthcoming financial return on investments regarding construction. Due to the monopolistic structure in China, Sevan Marine is dependent upon CNOOC in order to enter the market. This dependency upon a single possible customer increases the financial risks associated with getting established in a new market.

Based upon Sevan’s financial balance sheet, heavy investments in new markets must be carefully considered.

10.1.1.2 Physical resources 

Sevan Marine’s physical assets consist mainly of their fleet of oil rigs. The fleet consists of nine platforms, with four currently operating and three being built based upon long time contracts. These seven platforms are the source of the company`s financial income. These platforms are operating under long time contracts, and will therefore not serve as a source of additional income before their current contracts has expired.

Page | 67   In addition, Sevan owns two unfinished FPSOs. Finding clients for these FPSOs is important for Sevan Marine in order to improve the company`s financial situation, and help cover the production costs linked to these units.

CNOOC wants to build and own platforms themselves, and they already possess a large degree of FPSO technology, both trough their experiences in shallow water and trough their JVs with international oil companies. Therefore, the unfinished Sevan FPSO units will be of limited value for Sevan in the Chinese market, as well as the Sevan units tied to contracts.

In addition to the oil rigs, Sevan Marine’s offices are also important physical assets. Sevan Marine has offices in Norway, Brazil and Singapore. Due to the short geographical distance between Singapore and China, the Singapore office could serve as an important resource in terms of market activities. As Sevan’s financial resources shows, it is unfavorable for Sevan to invest heavily in establishing an office in China, before the associated risk has been limited.

10.1.2 Intangible resources 

10.1.2.1 Technological resources 

Sevan Marine’s technological resource is one of their major assets. The Sevan technology is the foundation of the company, and preserving their technological resources is necessary for the company. In addition, Sevan’s R&D capabilities enable the company to develop innovative design and construct units customized to the client’s needs. This is important in China, due to the specific conditions in the South China Sea.

10.1.2.2 Reputational resources 

Through media publicity, Sevan Marine has gained international recognition for the quality and performance of their platforms. In China, Sevan is mainly recognized as a deep-sea operator, and their reputation has also been very positively influenced in China due to the company’s good cooperation with COSCO. In China, Sevan has contributed to the development of the Chinese rig building capabilities. Furthermore, by constructing in China, Sevan contribute to creating new jobs for Chinese citizens. In addition to this, being the first company to fully construct a platform at a Chinese shipyard, has contributed positively to

Page | 68   the international perception of Chinese shipyards. Thus, Sevan’s reputational resources will be a great advantage for Sevan within the Chinese offshore market.

10.1.2.3 Company Culture  

Sevan Marine has a company culture that is based upon the values of diversity, adaptability, accountability and efficiency. Sevan’s business policies have a high focus on understanding other cultures, adapting to customer’s needs, as well as strict regulations concerning corruption. Sevan’s focus on understanding social and cultural impacts and developing strategies to respect rights and cultures of local communities, will serve as a good foundation if Sevan were to enter the Chinese market.

10.1.3 Human resources 

10.1.3.1 Skills / know how 

The Sevan Marine staff has expertise within the offshore oil sector. They employ highly qualified staff within engineering, construction and operation. With a low turnover rate, Sevan possess a sizeable group of staff, with highly valuable insight and experience regarding Sevan technology. Since China has little experience within deep-sea offshore production, the need of qualified operating staff is high, and is something that can be provided by Sevan alongside their units, by using a Build – own – operating model. This will especially apply for the Sevan drilling units, where there the need for specialized expertise is high.

10.1.3.2 Capacity for communication and collaboration 

The language and culture barrier is challenging for most western companies doing business in China. Sevan Marine has currently only one Chinese-speaking

employee at the Singapore office, working towards the Chinese market and the Chinese construction site. However, due to high activities on the construction site, market activities have not been prioritized. Based upon this Sevan`s knowledge about the Chinese offshore industry is limited. In addition, Sevan lacks

fundamental knowledge about the Chinese legal system. When doing business in China, personnel with a Chinese background will serve as a large advantage to limit the language and culture barrier. As of today Sevan Marines communication

Page | 69   and collaboration resources are limited regarding their possibilities to enter the Chinese market.