Advantec will continue its investments in Lithuania
The recent acquisition of Norwegian oil and gas enterprise Advantec by US engineering giant General Electric (GE) is set to benefit Lithuania’s port city of Klaipėda, which is home to an Advantec facility. The acquisition will not affect a planned €4 million expansion of Advantec’s operations in Klaipėda, which are situated in the city’s Free Economic Zone (FEZ). It will, however, raise the port’s profile with potential investors in the US engineering market thanks to the new connection with GE.
Jan Kare Pedersen, director of Advantec’s Lithuanian subsidiary, Advantec Lietuva, said that the acquisition, whose value has not been disclosed, would not lead to any major changes in the company’s activities, and was keen to stress that Advantec and its subsidiaries would continue to work as normal.
“Neither the name of the company nor its management structure will change. We will continue to supply our products and services to both existing and new clients”, Mr Pedersen said.
Advantec specialises in components for the international oil and gas market. It produces electronic and hydraulic control systems for oil wells, and safety control systems and other equipment used on offshore oil rigs. It also provides consultancy services to oil and gas companies and designs rigs and wells.
Development plans in Klaipėda
Advantec is a company whose star is certainly rising. Founded in Norway in 2005, employee levels have jumped from 20 to almost 400 employees since then, and it now has facilities in Australia, Great Britain, Lithuania, and the US, plus a sales office in Brazil.
The company’s production unit in Klaipėda FEZ, which specializes in metal structures for oil and gas rigs and wells, was established in late 2013 and started operating last year. And, as Mr Pedersen notes, the company is keen to build upon its already substantial investment in Lithuania through the development of the new production unit in Klaipėda. The 4,000 sq. m facility will accommodate both administration and production teams.
Daiva Bakė, Advantec Lietuva’s finance director, estimates that investment in the new facility will amount to around €4 million, and will enable the company to improve efficiency. “Currently we send our metal structures to our parent company in Norway,” she explained, “where the structures are equipped with hydraulic and electronic systems. Our aim is to produce a finished product in Klaipėda and, as a result, to create greater added value. The expansion project will help us achieve this.”
The Klaipėda expansion will also see a doubling of employee levels from the current figure of 80 with the recruitment of specialists in administration and production.
Mutual benefit
In terms of Advantec as a whole, the new deal with GE is expected to boost the company’s profile and provide it with access to new customers and markets. Magnar Aaland, director general of Advantec, believes it will increase the company’s technological capacity and enable it to make the most of its potential. “GE has global resources and great experience which can raise our technologies to the next level”, Mr Aaland said.
And the deal is also good news for GE. In an official press release, the global engineering giant pointed out that the acquisition of Advantec will allow it to increase its growth in the oil and gas market, expand its range of services, and provide greater added value for customers.
For Mr Pedersen, the acquisition will broaden Advantec’s horizons and give it new opportunities to grow. “The fact that the biggest participants in this segment will use Advantec technologies means a lot.”
A testament to Lithuania’s quality
There is no doubt that the GE and Advantec transaction will have a positive influence on business in Lithuania. Eimantas Kiudulas, director general of Klaipėda FEZ, believes that the acquisition will boost Lithuania’s visibility with potential investors. “Through this acquisition GE will arrive in Lithuania, which means we will appear on the radar of this US engineering giant. This will give us greater opportunities to attract further investment”, Mr Kiudulas said.
This sentiment was echoed by Mantas Katinas, general director of Invest Lithuania, a semi-state investment development agency. “The fact that a global corporation of GE’s stature will now be producing specialist equipment for the oil and gas sector in Lithuania is a testament to the quality levels we have to offer,” explained Mr Katinas.
He is also confident that GE’s presence in Lithuania will prompt other investors in the same industry to arrive. “This new deal will help the oil and gas industry in Lithuania to expand and attract new companies. We have seen a similar situation in the shared services sector, where the arrival of Barclays helped to attract other investors in the same field. In Hungary this has happened in the electronics industry and in Finland with data centers.”
Huge potential for oil and gas firms
Mr Katinas also noted that the current economic climate is helping to boost Lithuania’s popularity as a location for expansion for oil and gas companies. “Due to falling oil prices, companies are looking for ways to become more cost effective and to operate more efficiently. For many Scandinavian oil and gas enterprises, relocating some of their operations is the most effective way to do this. Amongst these companies, Lithuania has an excellent reputation as a platform for oil and gas supply chain projects.”
Mr Katinas believes Lithuania has advantages that are ideally suited for companies from Norway, the UK and the US. “We have highly skilled electronics, plastic and metal-processing professionals, a well-developed network of suppliers, and high-quality infrastructure.”
Last year Norwegian company CSUB opened a unit in Klaipėda for the production of equipment for oil and gas businesses. The unit produces glass-fiber shells to cover sea oil drilling pipelines. Mr Katinas believes their success, and that of Advantec, illustrates the huge potential Lithuania has for companies in this sector.
