Report - Kongsberg Gruppen 2007 - Kongsberg Maritime ...

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16 2 Develop attractive products directly for oil and gas companies Systems for the simulation of processes and decision-support systems Kongsberg has two state-of-the-art computer tools for building dynamic simulators of pro - cessing facilities: ASSETT and D-SPICE. The tools can be used as stand-alone systems or attached to the actual facility to mirror the entire process in real time – all the time. Hence the operator can run reconstructions of what has happened, or what could happen in the facility. Dynamic process simulators are an important element of integrated operations. The growing prevalence of marginal field development projects means that oil com - panies have to find new products and tech - nologies to optimise field production and re - covery rates. Simulators are absolutely decisive here, both for designing processing facilities, testing control systems and training operators, and as a real-time system for use as a decision-support tool to support operators' routine operations. Generally speaking, a supplier wants to be as close to end-users as possible in order to understand the market and customer needs, and to price products and systems based on their value for end-users. One of Kongsberg's strategic objectives is to be a more important contractor for oil and gas companies. The Group's products are often describ - ed as the 'intelligence' in the overall pro d - ucts or systems ordered by customers. All the same, our deliveries only account for a small part of a customer's total costs for a finished product. Accordingly, another stra tegic objective for Kongsberg is to increase the value of our deliveries. As a technology enterprise, Kongsberg focuses on knowledge-based products and systems for applications of great value to customers. We have therefore given priority to developing systems for the simulation of processes and decisionsupport systems (integrated operations) for oil companies and operators on the oil and gas market, as well as for the posi - tion ing and control of streamers for seismic companies. We will also undertake acquisitions and investments in establish - ed companies that have products for direct delivery to oil and gas companies. Thus we will strengthen the company's position and customer relations. Kongsberg – Annual Report and Sustainability Report 2007
THE GROUP VISION, OBJECTIVES AND DIRECTORS' REPORT & ACCOUNTS BUSINESS ACTIVITIES CORPORATE GOVERNANCE AND SUSTAINABILITY REPORT 1–11 STRATEGY 12–19 20–75 76–101 FINANCIAL STATEMENTS 102–125 126–160 17 3 Develop new opportunities through offset agreements The defence market is a political and protectionistic market. The market is ex - cepted from the EEA's competition rules. This means that most countries choose national suppliers and pose offset require - ments in connection with international procurements. Offset agreements entail that the seller country must undertake an obligation to purchase defence materiel from the buyer country equal to a value corresponding to the original purchase price. Kongsberg/Norway faces similar requirements when we sell defence materiel abroad. Offset agreements are important for maintaining and further developing a viable national defence industry, also in Norway. When large-scale Norwegian defence procurement orders are placed with foreign enterprises, offset agree - ments are used actively to secure work for Norwegian industry, especially the defence industry. Kongsberg is Norway's premier defence enterprise. Kongsberg has a history of being awarded a large part of the offset agreements signed. Earlier major procure - ments, e.g. air defence systems and frigates, have led to new alliances and partners for Kongsberg. Such agreements have often been decisive for gaining mar - ket access abroad. These projects also give employees and the organisation an important boost in respect of knowledge and technology. The Government plans to make a proposi - tion to the Storting in 2008/2009 for the acquisition of new fighter craft. This will be Norway's largest defence materiel pro - curement ever. The agreement will be profoundly important for the Norwegian defence industry, and strict offsetting requirements have already been posed. In 2006, the Government shortlisted three candidates for the contract: JAS Gripen, Eurofighter Typhoon and F-35 Joint Strike Fighter (JSF). Kongsberg is neutral to the choice of fighter craft. For us, it is important to be in position for any of the three alternatives and to find good industrial solutions, regardless of which type of fighter craft Norway chooses. The candidates have promised sig - nificant industrial contracts: JSF directly linked to the fighter craft, and JAS Gripen linked to fighter craft production and offsets. Eurofighter has withdrawn its candidacy for the moment. Kongsberg has already signed longterm framework agreements with Lockheed Martin and Northrop Grumman for the production of composite products for the new Joint Strike Fighter. The agree ments are conditional upon Norway selecting the JSF. The agreements will extend for eight years and call for the construction of a new composite factory. Fighter craft At age 40, the F-16 fighter craft will reach its maximum life expectancy in about 2020. The Government will submit a proposition to the Storting in late 2008 about buying new fighter craft. With a framework of roughly NOK 40 billion, this aircraft procurement will be Norway's largest weapon procurement ever. In December 2006, the Government voted to shortlist three candidates for the contract: Eurofighter Typhoon (Europe) JAS Gripen (Sweden) F-35 Joint Strike Fighter (USA) Offset agreements At the same time as the Armed Forces enters into agreements for the procurement of defence materiel with foreign vendors, they sign a contract that obligates the supplier to purchase Norwegian goods and services. Offsetting continues to be an important element of international trade. Norway operates with the same regime as other European countries. The Government and the Storting will require offset agreements and industrial participation in connection with defence procurements. The Armed Forces' future investment plans imply increased imports (e.g. new fighter craft). This opens opportunities for new offset agreements which, in turn, form a basis for entering new geographical markets. All Armed Forces' contracts in excess of MNOK 50 with foreign vendors are initially supposed to generate 100 per cent offset agreements. Kongsberg – Annual Report and Sustainability Report 2007
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161 ADDRESSES The Group is headquar
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