GIEK Doubling Down on Offshore Wind

Tasked to provide the financial power to help Norwegian companies export their wares to the world, Wenche Nistad, CEO of the Norwegian Export Credit Guarantee Agency (GIEK) pulls no punches when asked about the appetite for investment in traditional offshore oil and gas today: “The money has disappeared; nobody wants to invest in oil and gas anymore; it’s all about renewable energy.”

While GIEK’s guarantees to offshore wind total only about $500 million today, a scant portion of its cumulative portfolio, the offshore wind portion has quadrupled in value since the end of 2019. Nistad discusses the present, and future of offshore renewable investment strategy with Offshore Engineer.

State-owned GIEK manages an international portfolio of export-related guarantees that today totals $8.5B. Its focus has traditionally been oil and gas and shipbuilding followed by fisheries and aquaculture, it has widened its mission to include offshore wind, and more generally banks and investors participating in large international energy-infrastructure projects.

As the oil and gas downturn of 2014 has lingered beyond most every prognosticator projection, with modest climbs back above the $60 per barrel level first punctured by societal push for change and regulatory movement, then pummeled by the COVID-19 pandemic and resultant energy demand free fall, the organization has had to be nimble. To that end, GIEK has quadrupled its offshore wind portfolio to $453 million since the tail end of last year, and with ample capacity and competitive rates, it is actively seeking new business worldwide as part of its mandate to bolster the participation of Norwegian exporters in a burgeoning but capital-intensive sector.

Click here for related story and the video interview with Wenche Nistad.

“Offshore wind is really gaining momentum and is a great example of how we can actively help Norwegian industry re-channel by opening the door to new markets for existing wind expertise and other companies looking to extend their reach into green technology,” said Nistad. “(Most) offshore wind projects are huge and capital intensive.”

Central to the GIEK value proposition is GIEK's core offering – AAA-rated guarantees for long-term loan financing, as well as contractual delivery guarantees that protect both buyers and suppliers in case of default. Norway can offer triple A-rated instruments, which are a key tool in reducing the cost of project financing,” said Nistad. “We work together with commercial banks to share project risk, so loans will be repaid.” Recent highlights including finance for contracts won by Aibel, Fred Olsen Windcarrier and Nexans Norway,.

GIEK provided service delivery guarantees totaling NOK 1.3 billion towards the end of last year that enabled Norway’s Aibel to clinch two big European contracts. In February, it stepped in with a third guarantee package of an equal amount, this time on behalf of Fred Olsen Windcarrier for a project in Asia. Most recently it provided guarantee coverage amounting to around NOK 1.6 billion that helped cables specialist Nexans Norway secure a major contract with the Seagreen offshore wind farm under development off Scotland. “We have high capacity and we're ready to take on a lot more business in this sector,” said Nistad. 

“We can provide guarantees to anyone involved in putting together a wind project, and we are very competitive compared to what is available internationally. We don't calculate an amount based on a mathematical model. The rule of thumb is basically, the more you consider buying from Norway, the more you can count on getting guarantees from GIEK,” says Nistad. “And right now, offshore wind has huge potential.”

While the focus was offshore wind, Nistad was quick to point out that renewable energy of every stripe has been the domain of Norwegians for many years, a culture that historically is respectful and in tune with its natural surrounds. Hydro and solar power have been staples for years, and the country has become a leader in the manufacture of advanced battery technology to power the country’s burgeoning fleet of electric ferries, with the capacity to export this technology globally, too.

Artist’s impression of the cable-laying vessel Nexans Aurora currently under construction at Norwegian yard Ulstein Verft. GIEK is helping to finance the vessel. Photo credit: Nexans