Norway eyes funding role

NORWAY is preparing to open a new export finance office, using the country’s oil-supported balance sheet to help its own manufacturers and service providers to compete globally.

This could include potential loans to Western Australian resources projects.

The move recognises the difficulty many projects around the world have in obtaining finance following the credit crunch caused by fallout from the GFC, which started in 2007 and continues to rock financial markets.

Export Credit Norway opens its doors on July 1, taking over from Eksportfinans ASA, owned by a consortium of private banks and state institutions, which had provided similar facilities in the past but encountered difficulties as financial markets stalled.

Eksportfinans has suffered a barrage of bad news in the past year or so, including downgrades by major ratings agencies, profit warnings and breaches of European Union regulations regarding large exposures. 

A spokesman for Export Credit Norway said, within OECD guidelines, it would finance up to 85 per cent of the value of a contract with a Norwegian exporter and had no limit with regard to large exposures.  The loans must be guaranteed by Norway’s export finance insurance agency GIEK, or an acceptable equivalent.

Norway has built an extensive service industry around its own oil and gas assets. It also has a shipbuilding sector.

The Scandinavian nation has accumulated significant royalty revenues from its North Sea oil provinces, making it one of the world’s biggest sovereign wealth fund managers. 

It is using its financial clout to assist its spin-off industries while other nation’s exporters may be struggling to obtain debt funding.   

Norway’s main sovereign wealth funds are estimated to total around $700 billion. They are invested to fund the country’s pension system, which does not have a compulsory superannuation contribution like Australia’s.

Numerous Norwegian companies operate in WA providing a broad range of services to the resources sector, including geo-technical advice, engineering, pressure testing, safety, shipping and logistics. One of Australia’s biggest value-adding developments, the Burrup fertiliser plant in the Pilbara, is controlled by Norwegian giant Yara International.

About 30 per cent of the companies listed on the nation’s official website in Australia, www.norway.org.au, as being Norwegian or Norwegian-related have their local headquarters in Perth, with most reflecting some form of highly technical work connected to resources, from mining through to subsea oil and gas developments.