Dutch contractor Stork Technical Services continues to make inroads into the offshore oil & gas sector as it pursues its ambition to become a global force in the provision of maintenance, modification and overhaul services. Meg Chesshyre talks to the man with the plan, Scots-born chief executive Doug Meikle.
During the three years that Doug Meikle has been in post as Stork’s CEO he has forged one business out of more than 100 legal entities, in the process selling $300 million worth of non-core assets and spending roughly the same to bring in new businesses. The standout deal in offshore industry terms remains the acquisition a year ago of RBG, now re-branded Stork Technical Services, in a transaction – believed to be worth around $250 million – that expanded the group’s reach considerably.
‘In the course of the last three years, we’ve been shaping the business more and more towards oil and gas so we’re now 55% an oil and gas provider, about 25% in chemical and process industries, 10% plus in conventional power generation and the rest in various other industries,’ explains Meikle. ‘We’re about $2 billion per year in scale roughly, doing probably about half of that in Europe, roughly a quarter in the Americas and a quarter in the rest of the world, chiefly the Middle East, Kazakhstan, Malaysia and Australia.’
Building on its RBG strength, Stork Technical Services (Stork) has just confirmed a contract worth up to £125 million from Wood Group PSN to deliver integrated fabric maintenance services across all of Shell’s central North Sea assets for the next four years, with two one-year extension options. The company will now deliver its integrated offering on the Brent Alpha, Bravo and Charlie assets, in addition to the Shearwater, Nelson and Gannet platforms and Anasuria FPSO, which it has serviced (previously as RBG) since 2002 as part of the SORT4 joint venture. Last September it also secured a €34 million, two-year contract extension to provide fabric maintenance and deck crew services for Apache North Sea.
The AJS joint venture, set up by Amec, Jacobs Engineering and Utrecht headquartered Stork back in 2003 to deliver the ONEgas integrated services contract for the Shell/NAM southern North Sea offshore business, landed a three-year extension to that contract in 2010 worth €200 million per year. AJS operates cross border and executes maintenance, modifications and capital projects for 51 UK and Dutch sector offshore assets as well as gas plants in Bacton and Den Helder.
Under a five-year enterprise framework agreement awarded last autumn, Stork is providing maintenance services for Shell’s steam turbines, turbo compressors and associated kit equipment in the EMEA region. Meikle says of this agreement, which involves the maintenance of selected equipment in the Netherlands, Germany, Denmark and Qatar: ‘Our global reach – especially our ONE Stork strategy – enables us to respond quickly and effectively to customer needs. We are where our customers are, anywhere in the world.’
Stork notched up its first subsea project in West Africa early this year, and has also set its sights on creating a bigger oil & gas footprint in the Gulf of Mexico and Western Australia. In Angola, under a £10 million contract with BP, the company is now taking care of the subsea inspection work associated with an FPSO hull and its loading facilities’ infrastructure. To service this contract and future subsea activity across the globe, Stork has entered a 15-month charter of the DP2 dive, multi-support & construction vessel Adam’s Vision. A second DSV, Olympic Triton, is on hire for North Sea work and the company is looking into the possibility of deploying another vessel in the North Sea this season.
Meikle affirms that a ‘pretty good selling proposition’ emerged from combining Stork’s capabilities with those of the former RBG. ‘We’re dominantly an execution company, with an “Assess, Inspect and Repair” work flow which is proving popular with customers,’ he says. Shell remains the company’s biggest customer globally closely followed by BP, but he also sees Stork as a ‘natural partner’ for independents such as Apache and Talisman who are seeking to find new and innovative ways to extend field life and maximize the value of their assets.
Key attraction
Subsea was one of the key attractions of the RBG acquisition. ‘We felt in the subsea business, there really was something there that was a bit undervalued,’ Meikle explains. ‘We’ve had good growth in 2011; 2012 will score significantly forward again. Most of the work we do is around the physical integrity of the asset – implementation of inspection campaigns, corrosion measurements, light subsea construction, subsea bolting and tensioning, that type of thing – and since it’s all air diving we’re not really competing with the subsea construction companies.’ He is now looking to pull the various Stork capability strands together into a cohesive integrity management group and build on that. ‘Again, that’s a place where we feel that global coverage, consistent standards, being able to deal with technical authorities and technical experts on their own terms within oil majors and process companies is really important.’
Next on the Meikle business development agenda is the offshore wind farm market, which he sees as ‘another great opportunity’ for Stork Technical Services in an install and maintain role going forward. ‘We know how to install cables, to inspect and refurbish large offshore structures and equipment, take integrity measurements and corrosion measurements, how to do it by rope access, support it with the marine integrity measurements,’ he says. ‘We talk about trying to build a service canopy for our customers and in offshore wind I think we’ve got all the pieces.’
The Stork team in Aberdeen will be focusing particular attention on this market in the months ahead and sees a clear role for itself in helping to bring the wind energy sector’s approach to safety up to offshore oil & gas industry standard. ‘We really think we can do that well,’ says Meikle. ‘We come from a different place, where safety is an integral part of the valueadded services we provide.’
But he doesn’t anticipate longterm maintenance contracts of the kind Stork has with the refining, process and now offshore oil & gas industries materialising for wind farms yet awhile. ‘I don’t think the customers are quite ready for that yet, but we want to have all the services in place for when they do come calling.’
Current Stork turnover is $2 billion, but to succeed with its ultimate goal of servicing the likes of Shell and ExxonMobil on a truly global basis Meikle believes the company will need to be two or three times bigger. ‘We need to be at least of the scale $4-6 billion to be able to do that effectively. But once you get to that platform, there’s a lot of headroom because there’s a lot of money to be spent.’
Having joined Stork from Big Red, Meikle knows a thing or two about the upstream oilfield services business. He points out that although comparable in scale to oilfield services the MMO market has no really big players. ‘There’s no equivalent of Halliburton or Schlumberger in this marketplace and ultimately that’s the goal for us. Stork is a relatively big business as it stands today and there’s lots more to come,’ he adds. ‘We’re trying to position ourselves as an execution-based company that can support tier one contractors or the operators themselves, and that’s really our story, our vision.’ OE
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