Companies across the offshore supply spectrum used the recent downturn to take stock – either out of necessity or for strategic reasons – in order to reposition themselves for when the upturn finally kicked in. OE looks at one such company, process engineering and fabrication specialist Global Process Systems.
With operations in Dubai, Singapore and Malaysia, Global Process Systems (GPS) the company had a record year in 2008 as a result of orders taken prior to the financial crisis, but witnessed a major slowdown in 2009 when operators delayed projects due to the crisis and fluctuating oil price.
Chief executive Ian Prescott picks up the thread. ‘The last couple of years have undoubtedly been some of the most challenging our industry has experienced and quite a number of companies have unfortunately fallen by the wayside. It has not all been plain sailing for GPS either and we have had a number of major challenges to overcome. Tendering activity reduced markedly as many clients – large and small – took stock of the situation and tightened their belts, and not just in conventional markets such as Europe and the US but in our own specific markets of MENA and Southeast Asia. The Middle East of course was one of the first to suffer from the effects of the crisis with the cash situation tightening severely.'
Another factor that came into play for GPS was the decision taken in 2009 by its major shareholder Al Jaber Group to look for a strategic investor for the business, the intention being to maximise the company's further growth potential. While a number of parties showed interest, the improving market conditions throughout Q1 2010 and a major step-up in bidding activity resulted in Al Jaber deciding to retain its majority shareholding.
‘This process absorbed a significant amount of management focus and all the market uncertainty generally made it a very tough time for us,' Prescott notes. ‘The restructuring is now complete and in the last six to nine months, tendering activity has been at unprecedented levels.
Along with the restructuring came the installation of a new management team.
New team, new strategy
Prescott was appointed GPS Group CEO. He first joined GPS three years back, moving from Aker Kvaerner in Australia to take up the role of role of director and general manager of GPS' Singapore operations. His career began with the Royal Dutch Shell Group and over the last 25 years or so he has worked in Europe, Asia, Africa and North & South America in the oil & gas, petrochemical and also minerals & metals industries. He has also worked for other major industry contractors including Bechtel.
The GPS team in Dubai is now headed by Kingsley Onojaife, in Singapore by Vince D'Rozario and in Malaysia by Steve Chadwick, all of them seasoned professionals in the oil & gas engineering and construction sector. A new business strategy is also in place with the company now focusing more specifically on its core business – the design and provision of technology for process modules for offshore and onshore production facilities.
‘The basic requirement from our clients is the process technology for separation, dehydration or treatment of oil, gas or water,' Prescott explains. ‘Those skills then transfer into larger modularisation of process technology packages up to 2000t modules, such as those needed on FPSOs,' he says, adding that the modularised approach can lead to cost-savings, schedule advantages and a reduction in project execution risk, particularly when operating in developing countries with minimal infrastructure. The FPSO market is experiencing a resurgence with a number of vessels currently under conversion in the Singapore yards and new projects being tendered.
In the various locations that GPS operates, the company sets out to build a local capability. ‘We understand the importance of being physically close to our clients and their markets,' says Prescott, pointing out, by way of example, that Singapore was the natural fit to serve the FPSO market and that the Singapore engineering office is complemented by fabrication facilities on Batam Island, Indonesia, a 40-minute ferry ride away. ‘We can therefore do all the design in Singapore and the fabrication in Batam with finished products being easily brought back to the shipyards in Singapore for installation.'
In the Middle East, GPS will be looking to maximise further synergies with its joint venture partner Kentz Group with which it has worked for a number of years to pursue process EPC opportunities in the Gulf region. For one such project currently under way, the JV partners are building a 30,000b/d oil production facility in Yemen. Bids for other similar projects are also in the offing.
Migration into MOPUs
For GPS, the provision of the large scale modularised topsides resulted in a natural migration a few years back into early production facilities and the MOPU market. With the conversion of a jackup rig into a mobile production facility taking just 12 months, about half to one third the time for conventional offshore structures, it becomes an attractive option, says Prescott. ‘When oil companies strike a well, they want to move fast and they look for flexible options that can deliver rapid production and provide much-needed cash flow during further field development phases. A MOPU is the ideal solution.' MOPUs are increasingly being considered globally, but particularly in the shallow water markets of Asia.
While the new business model refocuses GPS on its core business – process packages – he emphasises that the MOPU conversion work is still very much a part of the portfolio. The company's Asset Group is led by Mark Hayes in Kuala Lumpur. ‘This is a core capability we have built up in recent years,' adds Prescott. ‘For clients looking to bring production onstream quickly we have unparalleled experience in packaging the required processing equipment for installation onboard a converted jackup, having completed six conversions in the last six years.'
Positive outlook
In terms of changes to the industry as a whole, Prescott has no doubt that the primary impact of last year's Macondo disaster in the Gulf of Mexico will be new legislative requirements and technical standards. ‘These will filter through to the supplier market as the oil companies increase their focus on safety performance and technical standards. This is likely to involve significant investment in terms of resources and skills training.'
The Southeast Asia and MENA markets are expecting a period of sustained growth and GPS has been gearing up to capitalise on this improving trend. New markets such as Australasia and South America are also on the GPS radar. ‘Since September 2010, over US$1 billion worth of additional prospects have been added to our target list and this continues to grow,' Prescott points out, citing opportunities in Iraq, Oman, Abu Dhabi, Kazakhstan, Syria, Africa, Indonesia, Vietnam, Australia and elsewhere.
‘We are now focusing on delivering these opportunities and translating them into real projects for the company.' OE