For this reason, innovators need to work hard to prove their technology before they can attract finance for it, he says. “It’s about showing that it works and that your product provides better productivity than whatever else is out there. You see this a lot in the North Sea, where new technology is being developed almost daily.”
To get onto the radar of decision makers, technology has to be proven to save them money, be safer and good for the environment. “I think the green technology that has been developed over the last ten years is a very good example of that,” says Bjørnstad.
“But it’s very difficult to attract capital for development of new technology, both from banks and equity, without having an underlying contract in place to secure income, where the risk for the new technology to work is assumed by the client. So strict speculative investments that depend on new technology are much more difficult in today’s market.”
New technology also has to prove itself more quickly in new projects “because you are competing with existing technology. If you are going to substitute existing technology with new, you need to be able to substantiate that from day one. That’s been my experience.”
When new technology promises improved operational efficiency but represents a higher cost up front, it can be difficult to make a case for that technology, says Bjørnstad.
“Of course, decision makers need to calculate their return on a long-term basis but maybe the problem is that many investors have a short-term view. They are not willing or able to appreciate the cost saving in the new technology.”
This is especially true for long-term projects, says Bjørnstad. “For shorter contracts with oil companies – say over 15 years – it’s much easier to substantiate the value of cost-saving measures.”
Photo: Wikborg Rein