today - osea 2020lamprell — one of the joint venture partners photo: cathelco get up to speed with...

THURSDAY 1 DECEMBER 2016 upstreamonline.com

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Today

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IN THIS ISSUE• Meet your HR practitioner of the future p7

• Automated Personnel Tracking System for Oil Rigs p8

• Diversity and depth of solutions a tailwind for SALT in APAC p8

• STAPPERT’s leading strategies p8

• Tubacex sharpens Asian focus with JV p10

• First in world visual exchange for oil and gas materials p10

• Optimise offshore operations with Sentio™ p10

Emas woeServices provider looks to cancel deals after heavy losses. Page 3

UK boostGovernment incentives aim to help country’s oil and gas scene. Page 4

Singapore pushLion City expected to take lead role in global LNG trade. Page 5

New marketsAustralia aims to expand sales of LNG. Page 6

Silver liningPositive outlook for offshore contractors. 1

New drive: a jack-up at Lamprell — one of the joint venture partners

Photo: CATHELCO

Get up to speed with the latest news from the world of oil and gas. Visit us at Stand 1J6-04 or log on to www.upstreamonline.com

Saudi Aramco and Lamprell are likely to take a final investment decision

within months on a major maritime yard facility in Ras Al-Khair, aiming to

create a top-flight rig fabricator and including a possible order for up to 20

new jack-ups. Page 2

Saudi rig yard push

2 Show Daily Thursday 1 December 2016

OFFSHORE FABRICATION

OFFSHORE fabrication yards in Singapore and the rest of Asia are suffering in the midst of a drought of new orders for drilling rigs and service vessels, but a major new yard initiative in the Middle East is poised to gain a substantial head-start on international rivals.

Upstream has learned that Saudi Aramco and selected part-ners are likely to take a final in-vestment decision within two or three months on a major mari-time yard facility in Ras Al-Khair, which would cater to building and repairing offshore drilling rigs, oilfield service vessels and com-mercial ships.

The project at the eastern Saudi port of Ras Al-Khair will be oper-ated by a joint venture between Aramco, the National Shipping Company of Saudi Arabia (Bahri), United Arab Emirates-based yard group Lamprell and South Korea’s Hyundai Heavy Industries.

With the Saudi state oil giant behind the project, and with Ara-mco having just signed a key long-term alliance agreement with US rig owner Rowan, it is understood orders for up to 20 new jack-up rigs could be on the drawing board over a 10-year period.

Sources close to the yard scheme revealed that it is moving ahead swiftly, with the final hur-dles likely to be cleared by early next year.

“The partners involved in the maritime facility are likely to make a financial investment deci-sion soon, together as well as in-dividually,” one source confirmed.

A second source associated with the project claimed the yard will involve “substantial investments” from Aramco and other partners, but declined to elaborate fully on the envisaged investments.

Aramco will apparently have the largest share in the new mar-itime facility, with Lamprell ex-pected to be the second biggest investor.

Sources said the yard will likely be divided into three separate zones, to be used for building new drilling rigs, rig maintenance and construction of offshore vessels.

At a time when newbuild rig orders have dried up completely for established offshore yards, Lamprell is expected to benefit

On site: a jack-up rig at Lamprell’s Hamriyah facility in the UAE. Lamprell is involved with the Aramco joint venture at Ras Al-Khair Photo: LAMPRELL

Saudi Aramco plans new rig yard at Ras Al-KhairJoint venture could have 20 new jack-ups on the drawing board over 10-year period

US GIANT Chevron has again been forced to halt production from the troubled first train at its Gorgon liquefied natural gas project in Western Australia, writes Josh Lewis.

A Chevron spokesperson confirmed to Upstream yester-day that output at Train 1 had been stopped temporarily while the operator assessed some “recent performance var-iations”.

The spokesperson added that production from the recently started second train had been unaffected and the project was continuing to produce LNG and load cargoes.

Train 1 has proved trouble-some for Chevron since it fired up the Gorgon project in March this year, with company forced to shut down production at the project in April due to problems related to the propane refriger-ant circuit on Train 1.

Production resumed two months later but was halted again in late June after a leak was discovered in a pipe at the plant’s acid removal unit.

Chevron was able to resume production in late July but it was reported earlier this month another temporary shutdown had hit Gorgon due to what was described as a brief unplanned outage.

So far, the project’s second train, which started up during the current quarter, has not been plagued with the same problems as Train 1 and pro-duction from Train 2 is con-tinuing to ramp up.

Gorgon is a three-train LNG project on Barrow Island, with Train 3 scheduled to come on line during the second quarter of 2017.

Once all three trains are up and running, Gorgon will have a nameplate capacity of 15.6 million tonnes per annum with production coming from the offshore Gorgon and Jansz-Io fields.

The project also includes the construction of a domestic gas plant with the capacity to supply 300 terajoules of gas per day to the West Australian market.

The Gorgon owners are op-erator Chevron on about 47.3%, ExxonMobil on 25%, Shell on 25%, Osaka Gas on 1.25%, Tokyo Gas on 1% and Jera on 0.417%.

New halt at Gorgon Train 1

NISHANT UGAL Singapore

The official OSEA2016 show daily is published by Upstream, an NHST Media Group company, Christian Krohgs gate 16, PO Box 1182, Sentrum, N-0107 Oslo and printed by Markono Print Media Pte Ltd, Singapore. This edition was printed on 30 November 2016. © All articles appearing in the Upstream OSEA2016 show daily are protected by copyright. Any unauthorised reproduction is strictly prohibited.

This newspaper is published by Upstream, which is solely responsible for its editorial content. The editorial content is not necessarily the opinion of the event organisers.

heavily from its role in this new Saudi facility. According to infor-mation released last week by Rowan, the new Aramco-Rowan joint venture is “committed to purchase an average of two new jack-ups per year for a total of 20 units from the manufacturing fa-cility within the maritime yard initiative which Saudi Aramco is setting up”.

Sources suggested the first of those new units could be deliv-

ered as soon as 2021. Aramco, in its capacity as a ‘customer’, will pro-vide the new company with long-term charter contracts to support the new rig acquisitions.

Houston-based Rowan and Aramco unveiled their partner-ship early last week, which is ear-marked for start-up in the second quarter next year.

Lamprell, meanwhile, signed a joint development agreement with Saudi Aramco, Bahri and

Hyundai earlier this year, con-cerning the possible establish-ment of the maritime yard in Ras Al-Khair.

The agreement follows a memo-randum of understanding that was signed in January.

Sources have suggested that the maritime facility would initially cater to the Saudi market, but in the longer term the vision is to become a global supplier of rigs and offshore vessels.

AUSTRALIAN LNG

Chevron forced to halt production again

Search the archive:

Gorgon

Thursday 1 December 2016 Show Daily 3

OILFIELD SERVICES

SINGAPOREAN services provider Emas Offshore has asked some suppliers to cancel procurement contracts after the company more than tripled its previously report-ed quarterly losses due to addi-tional impairments.

“Due to the challenging market conditions, the group is currently in negotiation with certain ven-dors for cancellation of procure-ment contracts to conserve cash and to assess if further impair-ment is required for the assets,” the Oslo-listed company said on Tuesday.

Following its quarterly and fis-cal-year results announcement on 30 October, Emas launched a “comprehensive impairment ex-ercise” that resulted in further write-downs of its assets.

Those write-downs brought Emas to a quarterly loss of US$323.5 million (S$461.2 million), up from the US$98.5 million loss it reported in October. For the full fiscal year, Emas’ losses totaled US$490.3 million, up from a previ-ously announced $265.3 million.

“Consequently the revised total equity for the group reduced from US$315.5 million to US$90.5 million as at 31 August 2016,” Emas said.

Emas’ initial write-down came as a result of its 11.5% stake in Malaysian contractor Perisai Petroleum Teknologi, which has been declared insolvent.

Emas and Perisai are joint ven-ture partners in Emas Victoria and SJR Marine, which own the Perisai Kamelia floating produc-tion, storage and offloading vessel and the offshore construction ves-sel Enterprise 3, respectively.

After its review, Emas realised a US$46.8 million impairment re-lated to Emas Victoria.

It also booked a US$20.7 million write-down on its investment in vessel contractor Intan Offshore.

“After these impairment charg-es, the carrying value of the group’s investment in (Intan and Emas Victoria) stands at US$17.1 million and US$105.5 million, re-spectively as at 31 August 2016,” Emas said.

The contractor also said it has launched legal proceedings against SJR to recover due receiv-ables, and has provided allowance for “doubtful receivables” of US$8.5 million for the quarter.

Meanwhile, a review of Emas’ own fleet of vessels resulted in an impairment charge of US$57.3 mil-lion, which brought the net book value of property and equipment to US$742.9 million.

It said it has modified its operat-ing lease arrangements and esti-mated that the cost of modifica-tion was US$24.2 million.

The beleaguered offshore contrac-tor would not be drawn on whether it would be looking to divest any vessels to help its balance sheet.

“Like any company, we are al-ways exploring options,” Emas Offshore official Hsu Chong Pin told Upstream.

Emas Offshore on the back footSingaporean company asks some suppliers to drop procurement contracts after more than tripling quarterly losses LUKE JOHNSON and AMANDA BATTERSBY Houston and Singapore

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EUROPE

THE UK government and the oil and gas industry are working to-gether to address the impact of the prolonged crude price slump, with Prime Minister Theresa May’s government coming up with incentives intended to help players identify and seize new op-portunities.

“Just last week, the chancellor of the exchequer effectively abol-ished the Petroleum Revenue Tax [and] he announced an additional £20 million (US$25 million, S$35.6 million) of funding for a second round of seismic surveys, build-ing on the success of the seismic programme in 2015,” said British High Commissioner to Singapore Scott Wightman.

“He provided certainty that companies would be able to access tax relief on their costs when they retain decommissioning liabili-ties for an asset after a sale.

“And he extended investment and cluster area allowances to in-clude tariff income in order to en-courage investment in key infra-structure maintained for the benefit of third parties.”

Wightman told Wednesday’s plenary session at OSEA 2016 that “industry experts estimate that despite the fact that we have passed the peak production point in the North Sea, there are still some 20 billion barrels of oil equivalent left in the UK conti-nental shelf”.

However, continuing govern-ment support will be required for those barrels to be exploited.

“The oil and gas industry in the UK is suffering... it’s going through challenging times,” he conceded, adding that North Sea oil revenues have dropped by over £10 billion in just two years.

To encourage new investment into the UK continental shelf, the government has introduced 100% first-year capital allowances for

Incentives: British High Commissioner to Singapore Scott Wightman Photo: OSEA

UK government works to boost oil industryNew incentives aim to help companies operating in country’s offshore arena

DUTCH innovation and tech-nology are at the forefront of the global oil and gas industry, according to Jacques Werner, Ambassador of The Nether-lands to Singapore.

Current such large technolo-gies include Heerema Marine Contractors’ new generation semi-submersible crane vessel Sleipnir, which is equipped with dual cranes for the instal-lation and removal of large structures.

This “revolutionary energy efficient” vessel, which is un-der construction at Singapore’s Jurong Shipyard, will run par-tially on liquefied natural gas, noted Werner.

The Dutch are frontrunners in LNG-fuelled vessels, he claimed.

“But we’re also to happy to see that Singapore is very fast now catching up with newly-built LNG-fuelled ves-sels,” Werner told delegates at Wednesday’s morning plenary session at OSEA 2016.

Other highlighted technolo-gies included Allseas’ latest dynamically positioned single-lift installation, decommis-sioning and pipelay vessel Pio-neering Spirit, and compatriot Shell’s Prelude floating LNG unit, which is under construc-tion at Samsung Heavy Indus-tries’ Geoje Island yard in South Korea.

This giant 488-metre long FLNG vessel is to be deployed on the Prelude field off Australia.

Werner also lauded the April 2015 memorandum of under-standing between the Port of Rotterdam and Singapore’s Maritime and Port Authority (MPA) intended to promote co-operation and the exchange of information, as well as re-search and development.

“The dynamic and complex challenges facing the shipping industry brought about by strong economic headwinds, stricter regulations, ever grow-ing vessels and new technolo-gies require port authorities to work more closely with each other and with industry part-ners to develop innovative solu-tions to tackle the challenges,” MPA chief executive Andrew Tan said earlier this year.

The Netherlands is home to the world’s first LNG bunkering facility in Rotterdam.

Dutch are leading the way

AMANDA BATTERSBYSingapore

almost all investment expendi-ture.

Also, in response to the recent downturn, the Scottish and UK governments have established a £500,000 city deal for Aberdeen.

This includes funding to sup-port Aberdeen harbour so it can compete for decommissioning work and help meet the recom-mendations set out in the Wood

Review on how best to exploit the remaining North Sea oil and gas reserves.

“The government is also help-ing [British] supply chain compa-nies to grow their businesses overseas,” he said.

“Between now and 2020 oil companies will spend more than US$2 trillion and we believe that a quarter of that will be accessible”

for UK companies. The govern-ment’s trade financing agency, UK Export Finance, is also supporting businesses — it provided “well over half a billion pounds of sup-port for exports in the energy sec-tor in the last financial year.

“And the chancellor announced last week that funding for UK ex-port finance will double,” added Wightman.

Jacques Werner


LIQUEFIED NATURAL GAS

SINGAPORE is expected to take the centre stage in the global liq-uefied natural gas market because of its logistics and trading capa-bilities, according to Deloitte Con-sulting’s Asia Pacific oil and gas leader Mark Edmunds.

Speaking at the OSEA 2016 con-ference in Singapore, Edmunds said the country is expected to emerge as the world leader in LNG trading.

“Singapore would be at the cen-tre of this universe (for LNG). I think LNG is the future and so from a bunkering stand point LNG comes here and moves around the world,” he said.

Edmunds claimed that major LNG and product trading organi-sations are based out of Singapore and leading global companies are setting-up significant operations in the country.

The Asia Pacific region accounts for more than 70% of global LNG

demand and Singapore continues to invest heavily in the LNG sec-tor, as it aims to establish itself as a major LNG trading hub in the region.

Singapore’s Minister of State Koh Poh Koon recently told dele-gates at the OSEA 2016 conference that the country is continuing to invest heavily in its LNG capac-ity with global LNG demand expected to rise from about 250 million tonnes per annum to 400 million tpa over the next two dec-ades.

With the LNG markets increas-ingly shifting towards active spot trades, Singapore is expected to play a greater role in the liquefied natural gas market, experts have claimed.

The Singapore Exchange is also working with Japan’s Tokyo Com-modity Exchange to help jointly develop Asia’s LNG market.

Edmunds said that as the cost of

Centre stage: Deloitte Consulting’s Asia Pacific oil and gas leader Mark Edmunds Photo: OSEA

Singapore to take lead role in global LNG tradeDeloitte Consulting’s Asia Pacific oil and gas leader Mark Edmunds tells OSEA 2016 that country’ logistics and trading capabilities provide great advantage

R STAHL has bucked the indus-try trend of oil and gas contrac-tors and service companies decamping from the Lion City to Malaysia, a neighbour often perceived as a lower-cost base, by moving its regional assem-bly from Malaysia to Singapore.

The Germany-listed, family-owned company specialises in Hazop products and solutions for a host of industries including offshore and onshore oil and gas, marine and pharmaceuticals.

The company used to assem-ble some of its 7000-strong product range in Malaysia un-der German certification, but that work has now been trans-ferred to a facility in Kallang in Singapore.

The local assembly facility today makes equipment in-cluding junction boxes, control stations and power distribu-tion boards, Stahl Singapore Asia managing director Graham Cooper told Upstream.

All that is left across the causeway now is a small sales office, he added.

The funding of the contrac-tor’s up-scaling of its Singapore operation is entirely internal.

“We’ve taken that risk as a company… Singapore is the best place we can be in the re-gion,” said Cooper.

R Stahl is keen to build its Singapore operation into a re-gional hub but achieving that would be easier if tax benefits were to be made available.

“Kallang needs to expand, we will need to upsize,” added Cooper.

R Stahl is taking advantage of the slow down in the oil and gas sector linked to the de-pressed crude price to train up local young talent, and these are given key performance in-dicators to achieve both in academia and business.

Also technical personnel have been drafted in to Singa-pore from the company’s Ger-man subsidiary.

Looking to the future, R Stahl wants to establish affiliations with local universi-ties to recruit youngsters that could be trained up ahead of the industry pick-up.

R Stahl moves assembly

NISHANT UGALSingapore

developing LNG facilities drops over time, it would emerge as not just a “bridge to renewable, but a fuel of future”.

China, Japan and India are expected to drive LNG demand in Asia, added Edmunds, while em-phasising that China’s role could even be more crucial.

“China is an enormous econo-my and I believe that even though coal is a domestic resource there and it’s cheap, they will begin to shift a bit to natural gas as a clean-

er fuel,” he said. Edmund also believes that India will emerge as a ‘wild card’ player as far as Asian LNG demand is concerned.

However, he added, India’s suc-cess with LNG will depend on how much it ends up spending on in-frastructure to bring liquefied gas onshore and to move it across the country.

“India is a pretty exciting place with high growth potential, but they will have to build the infra-structure,” he claimed.

OIL AND GAS SERVICES

Company has new base in Singapore

Search the archive:

R Stahl

www.jdngroup.com

VISIT US ATBOOTH 1R3-01


AUSTRALIA

AUSTRALIA is looking to main-tain its competitive edge as it re-mains on track to become the world’s largest exporter of lique-fied natural gas by 2020.

Speaking at the OSEA 2016 con-ference, the Australian govern-ment’s senior trade and invest-ment commissioner in Singapore said Australia’s recent free trade agreements with China, Japan and South Korea had enhanced the competitiveness of the coun-try’s energy exports.

“These three combined pur-chase more than two thirds of Australia’s resources and energy exports, and they were worth A$117 billion (US$87.4 billion, S$124.6 billion) in 2014-15,” David Campbell told delegates.

“Our trade agreement with Chi-na is already in force. It provides greater certainty for exporters by locking in existing zero tariffs on major resources and energy products, including crude petro-leum oils and liquefied natural gas.”

China will play a key role in the expected increase in gas demand in the Asia Pacific region, with gas consumption expected to double by 2030 as it seeks to diversify its energy mix and improve environ-mental outcomes.

However, Campbell noted that there are opportunities to market Australian gas beyond its tradi-tional customers of China, Japan and South Korea.

He highlighted India as a poten-tial key customer, despite the country currently buying more than 85% of its gas from current global export leader Qatar. How-

Looking ahead: Australia’s senior trade and investment commissioner in Singapore David Campbell speaks at OSEA Photo: OSEA

Australia targeting new markets for LNG volumesCountry looks ot maintain competitive edge with sights set on possible sales to India

THE body representing Australia’s upstream industry has hit out at the South Australian opposition government’s proposal for a 10-year moratorium on fracking in the state’s south-east, writes Josh Lewis.

Opposition leader Steven Mar-shall said the South Australian Liberal party would bring in the ban if wins the 2018 state election, claiming it would protect jobs in the state’s agricultural region.

“It makes no sense to put this highly productive region and South Australia’s enviable clean

and green reputation at risk by opening up some of our best farm-ing land to fracking,” he said.

The announcement was criti-cised by the Australian Petroleum Production & Exploration Associa-tion (APPEA), claiming the Liber-als were showing “short-sighted political opportunism” which could lead to “economic pain for no environmental gain”.

APPEA’s South Australia direc-tor Matthew Doman said the deci-sion was made without industry consultation and, if implemented, would put thousands of jobs at

risk. “There is absolutely no health or environmental reason to im-pose a moratorium on fracking — we have been doing it in the Coop-er basin for decades without incident,” he said.

“South Australia desperately needs new economic opportuni-ties.

“It desperately needs new sources of reliable energy. On-shore gas development can deliver both.

“All politicians have a responsi-bility to support sensible, fact-based decision-making rather

than surrender to activist scare-campaigns.”

If such a ban were implemented in South Australia, it would not be the first state to blacklist fracking, with the Victorian government in-troducing legislation last week to ban the practice, while a frack ban was also a key policy of the recent-ly elected Labor government in the Northern Territory.

The West Australian opposition government also flagged a poten-tial ban on fracking across large parts of the state’s south-west if it wins next year’s state election.

APPEA hits out at South Australia’s frack ban proposals

THE Australian government said it has decided to conduct a review on petroleum taxes given the “rapid decline” in tax revenues from the petroleum resource rent tax, writes Russell Searancke.

To help better protect Aus-tralia’s revenue base and en-sure that companies are paying the right amount of tax on their activities in Australia, the government said it will re-view the operations of the PRRT, the crude oil excise and associated Commonwealth royalties.

The review team will report back to the government by April 2017 on recommendations for reform of the PRRT.

“The integrity of Australia’s tax base is paramount. This government is committed to ensuring that Australia’s taxes are working as intended and companies pay the right amount of tax,” said Treasurer Scott Morrison.

The Australian upstream oil and gas industry association APPEA supported the review, saying it was timely given the industry was confronting a dramatic collapse in profits and a sustained fall in exploration levels.

“APPEA’s latest financial sur-vey of its members shows that — despite the industry recording its first-ever net loss in 2014-15 — it paid more than A$5 billion (US$3.7 billion, S$5.32 billion) worth of taxes during the same period,” said APPEA chief execu-tive Malcolm Roberts.

“For almost 30 years, the Commonwealth has used the PRRT as a super profits tax. The tax encourages investment by only taxing projects when up-front costs have been recovered and profits exceed a modest benchmark rate.

“However, when these condi-tions are met, the PRRT, in con-junction with the company tax regime, applies an effective tax rate of 58 cents in every dollar of profit,” said Roberts.

If projects are not profitable, usually because prices are low or upfront costs have not been recovered, the state applies a 30% company tax to revenue, he added.

Canberra eyes tax reform

JOSH LEWISSingapore

ever, with the country’s LNG de-mand expected to nearly double by the end of the decade, Campbell said there are reasons to expect Australia to play an important role in meeting India’s increased gas demand.

“We are geographically close to the four east coast LNG regasifica-tion terminals that are currently under construction in India, and will benefit if India seeks greater diversity in its supply to address

concerns around energy security,” he said.

While Australia continues to seek investment in conventional oil and gas exploration and bol-stering LNG exports, Campbell admitted the government is not currently actively promoting in-vestment in its potentially vast unconventional resources.

Despite Australia having esti-mated shale resources which Campbell said would be enough to

meet domestic demand for 400 years, the debate around hydrau-lic fracturing and potential mora-toria has seen the country shy away from marketing these re-sources to foreign investors.

“In the unconventional space we are not actively promoting in-vestment at the moment,” he said.

“There’s a big debate going on in Australia, as you know, at the fed-eral level and at the state and ter-ritory level.”

Review: Australia Treasurer Scott Morrison

Photo: AFP/SCANPIX

Thursday 1 December 2016osea-asia.com Show Section

Meet your HR practitioner of the future

The metaphor of large oil tanker often epitomises the agility and pace of change in Oil & Gas

companies. This is juxtaposed against

today’s sweeping global forces reshaping the workplace, the workforce, and work itself.

After years of struggling to drive employee engagement and retention, improve leadership, and build a meaningful culture, executives across all industries, including Oil & Gas, see a need to redesign the organisation and redefine future capability requirements.

Against the backdrop of economic downturn, four powerful forces — from demographic upheavals and the rise of digital technology to rapid business-model innovation, and socially driven evolution in the employer-employee relationship — are driving change for both HR functions and the organisations they serve, creating talent challenges and solutions radically different from those faced by previous generations of leaders.

This is driving the need to learn

Delegates meet at the OSEA2016 Industry Networking Night event

Industry networking night

#OSEA2018

Organisational restructuring ranks top in the agenda of most O&G companies, calling for strong leadership that is supported by an agile HR function. Julie Harrison, Partner, Human Capital — Deloitte Consulting, Australia and Rukhsana Pervez, Human Capital Leader — Deloitte Consulting, Indonesia shared their views on the top three Human Capital trends that market leaders should know of.

4 – 6 December 2018, Marina Bay Sands

Book your space at the Allworld Booth (1Z2-01) on Level 1 and enjoy an early bird discount from S$595 per sqm

from leaner, faster industries who are employing design thinking, flexible problem solving, self-forming teams and leveraging data for insights; skills which transcend industry and are core for all companies to be competitive, agile and innovative.

So what does this mean for Oil & Gas workforce, talent pipelines and HR practitioners of the future?

Facing low commodity prices and low growth, we see Oil & Gas companies striving to lower their operating costs through any means necessary including

Continued on page 9

Show Daily, Thursday 1 December 20168

Performing tracking in a dense metal environment has been a constant challenge, peculiarly when steady internet is often unavailable on the rig.

Thus, leveraging on recent advancements in software and cloud technology, Rutledge is proud to announce its initiative to track personnel in a harsh rig environment by creating LocationIoT devices, an industry specific tool for personnel safety on a rig.

It optimises a three level framework of a private overcloud, an under cloud on the rig itself and IoT devices to attain its objective of real time tracking of personnel.

Personnel safety is expected to be enhanced significantly with this capability by locating and rescuing injured rig crew quickly, which reduces loss time due to injury.

Fatalities may also be averted because the time taken for search parties to reach the injured will be greatly shortened, with the tool’s ability to accurately direct to the right location of the injured person.

As it can be used to restrict the access of

unauthorised personnel to certain parts of the rig, it will also help minimise incidents.

For the first time with the LocationIoT devices, people safety on a rig is augmented to an unprecedented level, presenting a paradigm shift in the rendering of affordable personnel protection in the industry.

Rutledge has engaged Red Hat solutions to be the first to launch a platform dedicated to rig HSES, with LocationIoT devices as its first solution to be released shortly.

Anne Joseph, Rutledge chief executive, said: “We have enthusiastically embraced a culture of innovation across our companies. We believe that blending strategy and creativity is the road to continuing relevance in our industry”.

• Rutledge Omni Services (Booth BN4-01) is delivering a presentation on ‘Introducing the SafeMate — Automated personnel tracking and access control system’ today at the OSEA2016 Tech Garage, Basement 2, 2.40pm till 3.00pm.

Sea and Land Technologies (SALT), a leading company providing solutions to the offshore and marine markets in the Asia Pacific region, has over the years diversified its portfolio and the depth of solutions and services it offers to the various markets.

SALT’s cutting edge solutions are as much applicable to the research and scientific communities that are involved in met-ocean weather pattern observations, sub-bottom geological plate tectonic studies, as they are to the commercial offshore companies that are involved in deep water construction or upstream oil and gas exploration activities.

With a pan ASEAN presence, SALT currently offers solutions for the High Precision Underwater Survey, Diving, Inspection, Repairs and Maintenance and, Subsea Buoyancy and Impact Protection

markets. “We at SALT are always finding ways to discover newer application areas for our products and solutions, beyond the commercial markets.

We believe that there can be more collaboration between organisations that are involved in the same studies, but for different applications, making it mutually beneficial, particularly in difficult economic environments,” said chief executive Zach Thomas.

“SALT has solutions and services to offer to address and bridge the needs of both scientific and the commercial groups operating in the offshore marine markets,” Thomas added.

• Visit Sea and Land Technologies at Booth 1C6-01, 1B5-06 and 1A6-06.

Increasingly demanding quality requirements, technological challenges, resource efficiency and cost pressure are the overriding topics in machinery, plant and equipment construction.

STAPPERT tackles these challenges by recognising these trends earlier and have ready solutions to cater to the different needs.

Being a market leader, the trading company specialises in products for demanding applications by offering a full spectrum of solutions from a single source. It has a wide range of products, materials, dimensions and services with unsurpassed breadth and depth.

Quality through dedication STAPPERT carefully selects its materials, which are precisely tailored to customer needs.

The company is in particularly high demand for steel solutions made of stainless, highly corrosion-resistant and heat-resistant steels, which are used in an extremely broad range of industries and for the most demanding applications.

Through this, STAPPERT has earned the trust of manufacturers as its products also ensure long-lasting reliability, which is why they can also be used for precision elements required by heavy-duty hydraulic and pneumatic systems.

Customers can have access to 15,000 products tailor-made for every application area, in standard and special grades — ferritic, austenitic and martensitic microstructures, from low-alloy chrome steel to the highly heat-resistant material.

They are used in several industries such as the oil and gas, chemical, machinery construction, offshore and shipbuilding industries, as well as in feed pumps, heat exchangers, wastewater plants, and turbine and blower blades.

The portfolio of the trading company is rounded out by competent consulting services in all matters related to stainless steel, a service spectrum ranging from pre-fabrication processing in state-of-the-art machining to customised acceptance and materials testing along with professional logistics. • Visit STAPPERT at Booth 1S6-04

Rig personnel being head-counted and verified by their names

in seconds via Automated Tracking Apps

AAE’s DTS-500 Deep Tow Sparker, One of SALT’s latest offering

Super Duplex Round Bars

Automated Personnel Tracking System for Oil Rigs

Diversity and depth of solutions a tailwind for SALT in APAC

Stappert’s leading strategies

Seen at SUBSEA Asia Conference

Show Daily, Thursday 1 December 2016 9

Continued from page 7

divestments and reorganisations — while at the same time trying fiercely to protect employee loyalty and engagement. This makes for a schizophrenic time for the HR professional — one that calls for speed and agility, sensitivity and courage.

It is also a time for Upstream to learn from Downstream. Downstream organisations have lived in a world of margin pressures, where agility in responding to market forces is critical to survival.

Many Downstream organisations have successfully reinvented themselves and implemented leaner, simpler processes across the business value chain and within HR.

According to Deloitte’s 2016 Human Capital Trends report, ‘The new organisation: Different by design’ — the “new organisation,” is built around highly empowered teams, driven by a new model of management, and led by a breed of younger, more globally diverse leaders.

As uncovered in the report, the top three Human Capital trends keeping Oil & Gas leaders up at night, are similar to those critical for HR professionals at large and include:• Organisation design — is moving toward decentralised authority, product- and customer-centric organisations, and dynamic

networks of highly empowered teams that communicate and coordinate activities in unique, powerful ways. O&G companies are taking the productivity lens on this trend.• Leadership — remains paramount for companies facing capability gaps — especially in O&G, where the current environment is presenting leaders at all levels with a true test.• Culture — continues to be one of the most important issues not to just HR leaders, but to the business overall.

Introducing the HR practitioner of the futureIn response to market forces and trends, HR functions are actively seeking non-traditional HR skills, often sourced from outside the HR function including analytics, innovation and design thinking.

It is important to note, this is not a replacement of what is good in the function, rather an enhancement.

While some HR practitioners will feel the urge and have the potential to “grow into” some of these new skills, it is unlikely this will happen fast enough.

This is a time for HR functions to partner with Innovation, Marketing and Finance functions — who carry many of these skills in abundance.

Key ingredients core to this new HR

persona include:• Flexibility at the core• Project / work initiative focused• Remuneration strategy flexibility• Tech-savvy and globalised• Long-term and more strategic in nature.

The HR practitioner of the future will embrace the changing role of HR, transitioning from operational to strategic, playing a stronger advisory role.

Advice will need to be global and employees and Line Managers will start owning more traditional HR activities, particularly concerning people development and management.

What does this mean for me?It is time to start building, buying or acquiring these skills through partnerships to drive a focus on talent, a focus that needs to be relentless and enabled by HR, to build your workforce of the future.

Now that you’ve met the HR practitioner of the future, how are you going to attract them to come to your company?

•• Catch Julie and Rukhsana today at the ‘Delivering High Impact HR to Support Market Instability while Planning for Industry Resurgence’ Masterclass, OSEA Conference, from 9.30 am to 12.30

OSEA2016 Conference speakers, from left: Jason Waldie, Associate Director,

Douglas Westwood; David Campbell, Minister (Commercial) & Senior Trade &

Investment Commissioner, Australian Trade and Investment Commission; His

Excellency Tormod C. Endresen, Ambassador of Norway to Singapore; His

Excellency Scott Wightman, British High Commissioner to Singapore; His

Excellency Jacques Werner, Ambassador of The Netherlands to Singapore; Mark

A. Edmunds, Asia Pacific Oil and Gas Leader, Deloitte

Meet your HR practitioner of the future

Seen at OSEA conference

Conference Highlights: Thursday 1 December9.30am to 12.30am

ASSET OPTIMISATIONMarina Bay Sands,

Level 3, Begonia 3002

Digital Oil Fields with Improved

Cybersecurity

Cyberphysical O & G Assets Reliability Assurance and Decommissioning

Skills Management

OPERATIONAL EXCELLENCEMarina Bay Sands,


Sustainable Strategies for

Decommissioning and Well

Abandonment

SUSTAINABLE GROWTHMarina Bay Sands,


Delivering High Impact HR to

Support Market Instability while

Planning for Industry Resurgence

Julie Harrison

Rukhsana Pervez

Show Daily, Thursday 1 December 201610

Tubacex has signed a joint venture agreement with Japanese company Awaji Materia to work hand in hand for the manufacturing of special stainless steel components at its factory based in Thailand.

This operation implies a capital increase of US$3.3 million subscribed by Tubacex Group through the Italian firm IBF, which accounts for 60 per cent of the new company’s stake. As compensation for the remaining 40 per cent, Awaji Materia will provide the assets for the stainless steel special fittings factory.

It is expected that the new company, Tubacex Awaji Thailand, which currently has 40 employees, will invoice €20-25 million with the manufacturing of stainless steel elbows, reductions, Ts and Caps in three years’ time. They are produced in standard small diameter to complement the “fittings” range that Tubacex has been offering through TTA (Spain) and IBF (Italy), allowing for industrial synergies with its tube plant located in India.

With this operation, Tubacex maintains its commitment to the Asian continent, one of the fastest growing markets, with its first venture within Southeast Asia in conjunction with a Japanese partner with proven experience in the fittings manufacturing sector and a recognised position in the market.

For CEO Jesús Esmorís, “the crisis in the sector has hit the fitting sector particularly hard, but we have reacted with a plan for the specialisation of our plants and a strategic acquisition in Thailand that will help us to reach our goals of diversification, better positioning in the value chain and proximity to the final user”.

• Visit Tubacex Group at Booth BL3-01

Founded in 2014, the EOG Platform is formed by a group of like-minded professionals who desired to bring convenience and transparency into the supply chain of valves and piping products.

How it worksThe largest online portal for pipes, fittings, flanges and valves easily accessible by industry professionals, the EOG Platform is a convenient avenue for suppliers to list globally, their ex-stock materials at no cost, without having to be confined by geographical zones.

For buyers, this portal aids them in sourcing for ex-stock piping products, check for budgetary prices and also gathers product technical information - all within a finger click.

“EOG Platform capitalises on today’s Internet technological advancement into creating supply

chain transparency! Embracing and adapting to the ever-changing business environment is the future for our industry.

Having one of the highest attendance rates for Oil & Gas shows in this region, we hope that through OSEA2016, we can reach out to a wider scope of audience as we demonstrate the benefits of the EOG Platform at our booth”, said Don Tan, Managing Director.

To ensure integrity and reliability of all transactions, EOG Platform has in place a strict registration process for stock listing.

To wipe out malpractices, only users with legitimate user log-in details are able to perform transactions.

• Visit Valves and Piping Asia at Booth 1D3-01

SMD, a leading provider of subsea technology is showcasing at OSEA2016 the new Sentio™, a highly advanced synthetic environment and virtualisation platform that can optimise and significantly improve the efficiency of operations in any offshore environment.

Sentio™, the first of a number of new offerings to be delivered from SMD Services, enables the user to virtualise any operational environment across the full ocean engineering value chain, from topside to subsea.

This can improve operational safety, identify and mitigate risks and significantly lower costs by understanding operational needs before going offshore.

Dr Mahesh Menon, Digital Services Product Manager feels this is a perfect time to launch this innovative platform to the market, “Sentio™, developed with our technology partner Tree-C, generates a unique insight into offshore operations.

This enhanced perspective means the customer is able to make highly informed decisions, ensuring operations are safe,

reliable and fully optimised prior to the real life operation — all virtual, from wherever they are based.

This is extremely valuable to a variety of customers in the offshore industry, especially in today’s challenging oil and gas economic climate. Sentio™ will help get the job done right the first time.”

The environment can be tailor-made to meet specific requirements at any stage of the operational life cycle, from engineering assessment, to training, to mission validation and de-commissioning. This ability eliminates the need for high-cost physical testing and resources. The speed at which Sentio™ lets the user create models and environments gives them the capability to produce an unlimited number of virtual scenarios, each offering reliable insights into how real-world operations will play out.

Graham Puntis, Managing Director of SMD Services added: “In these challenging times for our customer base, SMD recognises the need to provide

Stainless steel elbows manufactured by Tubacex Awaji Thailand

EOG Platform

Visitors at OSEA experiencing the Sentio™ platform at the SMD stand

Tubacex sharpens Asian focus with JV

First in world visual exchange for oil and gas materials

Optimise offshore operations with Sentio™

reliable through life support for subsea intervention assets owned by our clients.

“SMD Services will continue to offer the traditional support options that our customers have

always enjoyed, and in addition we will be providing a range of solutions designed to increase availability and reliability of ROVs, trenchers and ploughs, whilst helping to reduce through life

costs of ownership. Sentio™, our state-of-the-art synthetic environment tool is the first in this range to be launched.”

• Visit SMD at Booth BE2-06


INDUSTRY OUTLOOK

TORMOD Endresen, the Norwe-gian Ambassador to Singapore, acknowledged that the offshore industry has had to endure some very rough weather of late due to low oil prices, but he chose to con-centrate not on the dark clouds but rather the silver lining.

Speaking at OSEA 2016 in Singa-pore, Endresen said that some 40,000 Norwegian oil industry professionals had lost their jobs during this downturn, and that a large number of specialist Nor-wegian vessels are lying idle at present.

But relief is coming, he argued, aided by industry-wide consolida-tion and a vast reduction in the cost base.

“This is part of making the whole industry more efficient… so when the market comes back we’ll be in a very strong position.”

In reference to the prevailing dark mood in the offshore indus-try, Endresen said: “There are, the way I see it, at least two types of light in this tunnel, and the first light is not too far away.”

He pointed to the widespread expectations of recovery for the oil and gas sector in the 2018-2020 timeframe.

“Then there is the second light… a beaming, shining light, maybe a decade or two down the road,” Endresen said, with reference to making use of the competence gained in the offshore oil and gas sector and applying it to “existing and emerging ocean industries”.

He mentioned specifically that, as global population continues to

Hopes: Norway’s Ambassador to Singapore Tormod Endresen speaks at OSEA Photo: OSEA

Silver lining on horizon for offshore industries Norwegian ambassador has positive outlook for players in strong position for recovery

CENTRICA has filed a develop-ment plan with the authorities for its Oda field off Norway to pull the trigger on investments of around Nkr5.4 billion (US$630 million, S$898 mil-lion), with local contractors set to gain the lion’s share of the spoils, writes Steve Marshall.

The UK operator claims it has cut project costs significantly through a strategic partner alliance with key suppliers Aibel, Subsea 7, FMC Technolo-gies and DNV GL, with invest-ments reduced by about 40% over the past two years as it has also benefited from lower market rates.

The North Sea oilfield, for-merly named Butch, will be developed as a 14-kilometre subsea tieback to Aker BP’s Ula field platform to the west, with oil to be exported to Ekofisk for onward transport through Norpipe to the UK’s Teesside terminal, and produced gas to be injected into the Ula reser-voir to boost recovery.

The subsea solution will con-sist of a template with three wells — two producers and one water injector — and the tie-in to Ula will reuse infrastructure from the Oselvar field that is set to be shut down in 2018.

The Oda field, discovered in 2011, is now estimated to hold between 30 million and 70 mil-lion barrels of oil equivalent, of which about 95% is oil.

Production is scheduled to start in 2019, with a peak out-put rate of about 35,000 barrels of oil equivalent per day.

It will mark Centrica’s debut field development as operator off Norway since starting activities off the country 10 years ago.

Centrica Norway’s general manager Dag Omre said he ex-pects to “award several contracts soon”, with more than 80% of the total contract value set to be handed to Norwegian suppliers.

He claimed the Oda project “is robust even during times with low oil and gas prices”.

While Centrica is not disclos-ing the break-even price for the project, it is understood to be between US$30 and US$35 per barrel.

Centrica delivers Oda plan

ERIK MEANS Singapore

rise and as resources onshore are gradually depleted, the world will increasingly need “to look off-shore for resources, for protein, for energy, for minerals, maybe for medicine, maybe for other things that we don’t realise today”.

“I think we have to stop think-ing in silos in industry because there’s so much going on in the

various ocean industries that will come together in a new way. Much of the competency that we have gained in oil and gas will also be applied to new industries in the oceans,” Endresen predicted.

He reflected on previous chal-lenges and difficulties experi-enced by the North Sea offshore industry, which, with the benefit

of hindsight, turned out to be “a blessing in disguise” as it forced Norway to hone skills in deep sea drilling and harsh environment operations.

This, Endresen told the audi-ence, has put the country’s off-shore sector in a highly enviable position to succeed in other ocean industries.

Search the archive:

Centrica


CHINA

ALGERIA’S state-owned oil com-pany Sonatrach has awarded a major contract to China National Petroleum Corporation-owned service provider Greatwall Drill-ing covering well logging services in the North African country.

The five-year contract, which also carries two years of options, will involve sophisticated well logging services including logging while drilling and measurement while drilling.

The award was made in mid-November, with the Chinese con-tractor understood to have beaten rival bids from Schlumberger, Halliburton, Baker Hughes and Weatherford.

Ren Jing, manager of Greatwall Drilling’s marketing management department, told Upstream on the sidelines of OSEA 2016 in Singapore that Greatwall typically partici-pates in more than 280 tenders for onshore drilling services annu-ally.

She added that the company has already submitted bids for the next three years.

South America and North Africa are Greatwall’s primary target markets and the company is hop-ing to land more jobs in these re-gions.

Ren said the company has won more international jobs this year, but the revenues have tempered compared with previous years due to the challenging business envi-ronment brought about by weak-ened oil prices.

“The onshore drilling market is now more challenging than it was in 1999, when contractors also suf-fered from the low oil prices,” she said, adding that Greatwall is earning less now for the same type of work.

Roughly 50% of Greatwall’s opera-tions are outside China, with the company having expanded its foot-

Company outlook: Ren Jing, head of Greatwall Drilling’s marketing management departmentPhoto: XU YIHE

Greatwall celebrating major Sonatrach awardChinese service provider to carry out well logging for Algerian state-owned company

INVESTING enough time and money on front-end engineer-ing and design study work is key to optimising capital ex-penditure for liquefied natural gas import terminals — be they land-based or floating storage and regasification units, according to Dilip Patel of Praj Marine Consultants.

Feasibility study work can come up with a wide range of variables, with costs ranging widely from between minus-15% to plus-50%, all while a decent FEED study gen-erally comes with a project capital expenditure accuracy of between plus or minus 15%, he said.

“That should be generally good enough to make a final investment decision although some companies insist on plus/minus 10%.

“To achieve that you have to have spent a lot more amount of resources and money on de-veloping the engineering dur-ing the FEED stage,” he told attendees at the ‘Capex optimi-sation in new oil and gas projects’ master class at OSEA 2016.

Another important issue to reduce the risk of capex esca-lating is that operators do not make significant changes to the workscope after a final in-vestment decision is taken and the engineering, procurement and construction contract has been awarded.

“More time and money invested in the FEED and the decision-making will pay off in controlling the final cost [of LNG import projects],” added Patel.

Site selection is also key in the cost optimisation of on-shore receiving and regasifica-tion facilities.

Patel recounted the example of the Revithoussa import facility in Greece where it was only discovered during con-struction that a fault line ran under the area where the LNG storage tanks were to be locat-ed.

“The Greek government end-ed up with a huge bill because the wrong decision was made,” he said.

Import facilities typically ac-count for 10% to 20% of an LNG project’s capex with the major-ity 80% to 90% being associated with the costs of exploration, liquefaction and shipping, said Patel.

FEED key to LNG capex

CHINA’S CNOOC Limited has started the front-end engineering and design work on the latest satellite oil development at the Weizhou oil complex in the shallow-water Beibu Gulf.

The development concept for the WZ 12-8E and 12-3 fields is a leased mobile offshore production unit and subsea flowlines to an existing platform at the WZ

12-8W field, said co-venturer Horizon Oil. The WZ 12-8E and WZ 12-3 discoveries contain about 11.1 million barrels of oil and the project has entered the FEED stage, added Horizon. An oilfield development process has also started. First production is targeted for January 2019.

Horizon chief executive Brent Emmett said the Weizhou complex had been a great

asset, and still has two-thirds, or 21.4 million barrels, of the proven plus probable reserves to be produced.

Emmett said the capital cost of the new project net to Horizon is about US$20 million (S$28.5 million).

CNOOC holds a 51% operating stake in Block 22/12, with Horizon on 26.95%, Roc Oil on 19.6% and Majuko on 2.45%.

CNOOC Ltd plans leased MOPU for Weizhou oil complex

Xu YiheSingapore

AMANDA BATTERSBYSingapore

LIQUEFIED NATURAL GAS

Optimising terminal project developments

print in Africa, the Middle East, Central Asia and the Americas.

The company is currently focused on projects sponsored by national oil companies, which are now investing more in upstream exploration and development ac-tivities than international oil companies.

Ren added that international players, on the other hand, are

more focused on projects involv-ing sophisticated technology and complex geology.

Greatwall has also attempted to expand its business by providing complete well service solutions covering drilling, logging, cementing, coring, workover, sidetracking and fracturing instead of a just well drilling.

She said this strategy had ena-

bled oil companies to make sig-nificant cost savings, with Great-wall offering an integrated all-in-one service package that helps save clients the trouble of negotiating and co-ordinating with different contractors.

Demand for such services nor-mally comes from oil companies ready to optimise operations at brownfields.


DECOMMISSIONING

HUNDREDS of projects are expect-ed to be decommissioned in the next few years as spending in the sector is forecast to reach US$13 billion (S$18.5 billion) per year by 2040, according to new research from IHS Markit.

The decommissioning of ageing offshore oil and gas platforms, subsea wells and related assets is increasing, with more than 600 projects expected to be disposed of during the next five years alone, IHS Markit said in its Off-shore Decommissioning Study.

The study concluded that this rapid trend toward decommis-sioning will also cause spending to rise significantly.

Each year, the industry cur-rently decommissions an average of 120 projects globally, according to IHS.

However, between 2021 and 2040, an additional 2000 offshore projects will be decommissioned, requiring about US$210 billion in

total expenditure from 2010. Europe is expected to absorb about 50% of the global decommission-ing spend as the industry removes major offshore structures from the North Sea.

“We see increasingly stringent decommissioning regulations coming into force at the same time that the inventory of struc-tures nearing end-of-life status is getting larger and more complex,” said Bjorn Hem, one of the study’s authors.

“At the same time, the providers of decommissioning services are very fragmented — there are no dominant players, so this makes it even more difficult for companies to accurately predict decommis-sioning costs and risks,” Hem said.

According to the report, the Gulf of Mexico has been the larg-est region in terms of the number of platforms decommissioned at about 4000.

With more than 5000 oil and gas

structures in place, it also has the largest number of platforms yet to be decommissioned.

“While North America is the largest market for decommission-ing, the European region has the largest amount of offshore decom-missioning spending, based on the size and volume of the structures being decommissioned in the North Sea, including concrete gravity-based structures,” said Grigorij Serscikov, another study author.

Statoil, Total, Chevron, Exxon-Mobil and ConocoPhillips round out the top-five operators globally in terms of spending by operator, according to the report.

Angola and Nigeria will drive decommissioning spending in Africa, while shallow-water Aus-tralia will drive demand in the Asia Pacific region, it added.

Mexico and Brazil will be the focus of decommissioning de-mand in Central and South Amer-

ica, IHS said. Meanwhile, decom-missioning costs will continue to vary and increase with water depth and size, as well by type, complexity and size.

“In general, historical decom-missioning costs for rigs in the Gulf of Mexico have been in the US$500,000 to US$4 million range for shallow-water structures,” IHS Markit said.

According to the study, a four-pile structure in 15 metres of water typically costs just under US$2 million to decommission and remove, whereas a structure in 100 metres of water will cost nearly double that to disman-tle.

“The North Sea involves much larger structures and costs typi-cally are higher. For example, one gravity-based system with a 22,500-tonne topsides and an 180,000-tonne substructure has an estimated decommissioning cost of US$2 billion,” the study said.

Lining up: the Allseas platform installation and removal vessel Pioneering Spirit is set to carry out Shell’s Brent decommissioning project in the UK North Sea Photo: ALLSEAS

IHS forecasts boom in decommissioningReport estimates spending on taking ageing projects out of service will reach about US$13 billion per year by 2040

FLOUNDERING vessel operator GulfMark Offshore has a pro-posed a major overhaul of its debt as it tries to stay afloat in a rapidly deterioriating mar-ket, writes Luke Johnson.

GulfMark announced plans for a tender offer of up to US$300 million (S$428 million) of unsecured senior notes due in 2022.

The all-cash transaction would be financed by MFP Partners and Franklin Mutual Advisors through a US$100 mil-lion secured term loan and a US$100 million revolver.

Franklin will cover US$75 million of the committed financing and US$50 million of the new revolver. MFP will cover the rest.

The investment also includes at least US$50 million in new equity, GulfMark said.

Raging Capital has also com-mitted to tender about US$85 million of the notes.

Once the tender offer closes, GulfMark will offer current stockholders a chance to buy stock of the restructured com-pany at the same equity price as the financiers.

Analysts viewed the scheme as generally positive.

“Positive to simply move on, hit the reset button, and account for a material portion of outstanding debt,” Capital One Southcoast analyst Joseph Gibney wrote in a research note.

Tudor Pickering Holt (TPH) said GulfMark is “doing all it can to remain a going concern”.

In a presentation posted on Monday detailing the restructuring, GulfMark left no doubt about the dire state of the offshore service vessel market due to the “unprece-dented decrease” in the global demand for offshore drilling.

“Quarterly average dayrates are still coming down and, as a result, the industry is in an un-sustainable state... (which) may prevail for years, not quar-ters,” GulfMark said.

TPH reckoned the OSV indus-try must scrap or retire anoth-er 1200-plus vessels before sector fundamentals can im-prove.

Meanwhile, Gibney said debt restructuring for GulfMark rivals Hornbeck Offshore and Tidewater “also seems inevita-ble”.

To that end, Hornbeck has engaged third-party advisors to assess its capital structure and Tidewater is in extended negotiations with its lenders.

GulfMark in debt overhaul

ANAMARIA DEDULEASALondon

VESSEL OPERATORS

MFP and Franklin to finance tender

Search the archive:

Hornbeck


NORTH AMERICA

BAKER Hughes plans to form a pure-play North American pres-sure pumping company with backing from private equity firm CSL Capital Management and Goldman Sachs-managed fund West Street Energy.

CSL and West Street Energy will give a combined US$325 million (S$464 million) in cash to the new company, US$175 million of which will be used to strengthen its bal-ance sheet and position it for growth. The remaining US$150 million will go to Baker Hughes.

The new company will operate under the BJ Services brand and will be headquartered in Tomball, Texas. Baker Hughes giant bought BJ Services in a 2009 deal valued at US$5.5 billion.

Under the terms of the new agreement, Baker Hughes will contribute its North American land cementing and hydraulic fracturing businesses.

Meanwhile, CSL will contribute its Allied Energy Services plat-form, which provides hydraulic fracturing and cementing serv-ices in North America.

The combined company is ex-pected have 1.9 million hydraulic horse power and more than 240 cementers among its assets.

CSL Capital Management and West Street Energy will together own 53.3% of the new company, with Baker Hughes keeping the remaining 46.7%.

Warren Zemlak, current presi-dent chief executive of Allied En-ergy Services, will serve as chief executive of the revived BJ Serv-ices.

Baker Hughes did not disclose any other appointments, but said the executive team will include “oilfield services veterans”.

“The proposed transaction will create a pure-play pressure pump-ing competitor for the benefit of shareholders, customers and em-

Expertise: Baker Hughes chief executive Martin Craighead Photo: BAKER HUGHES

Baker Hughes sets up pressure pumping pactOilfield services giant partners CSL and West Street Energy in new pure-play company All eyes

on Mexico shallowsOIL and gas players have begun lining up for Mexico’s second shallow-water bid round, with 19 companies expressing inter-est, six requesting data room access and three signing up for pre-qualification.

Mexico’s National Hydrocar-bons Commission (CNH) — headed by president Juan Carlos Zepeda — said the trio requesting pre-qualification so far are US supermajor Chevron and Norway’s Statoil, close observers of the country’s oth-er rounds, as well as US giant ConocoPhillips.

They were joined in the data room by Mexican private eq-uity outfit Sierra Oil & Gas, the UK’s Premier Oil and Spain’s Repsol.

Companies have until 11 Jan-uary to request data room ac-cess and 27 January to begin the pre-qualification process.

The presentation and open-ing of offers will be held on 22 March.

Round 2.1 covers 15 blocks off Mexico in the Tampico- Misantla, Veracruz and Sureste basins.

A TEXAS jury last week awarded $146 million in damages and other fees to a company owned by Dallas oil tycoon T Boone Pickens in a decade-old dispute over inter-ests in more than 160 wells in the western part of the US state.

Pickens’ Mesa Petroleum Part-ners had accused energy compa-nies J Cleo Thompson, Delaware Basin Resources and Baytech of working together to cut the com-pany out of ownership interests

and profits. The suit revolved around a joint operating agree-ment with Delaware Basin Re-sources and Baytech, signed in 2006, and a participation agree-ment with J Cleo, signed in 2007.

Both agreements were for the Red Bull prospect in the Permian basin.

Documents filed in a county court show jury found that the companies did not act in good faith regarding the agreements, and

failed to disclose important infor-mation, including correct produc-tion figures and changes in leases.

Mesa had originally asked for US$1 billion (S$1.4 billion), but a spokesman for Pickens called the US$146 million award a “fair con-clusion” of the case.

“This case emphasises and vali-dates important legal rights, and we are proud to have been a part of it,” Mesa said.

Paul Rudnicki, chief financial

officer at J Cleo Thompson, said the company was “gratified” the jury did not pursue the US$1 bil-lion claim. The company will shoulder US$6 million in damages instead.

“We believe the evidence does not support the verdict that J Cleo Thompson breached the joint operating agreement,” Rudnicki said. “For example, J Cleo Thomp-son did not even drill the wells at issue in the verdict.”

REGULATORS in Newfound-land & Labrador have issued their latest call for bids for acreage off Eastern Canada in the Labrador South region.

Under the scheduled land tenure regime the Canada-New-foundland & Labrador Offshore Petroleum Board (C-NLOPB) is calling for bids on 10 parcels to-talling nearly 2.3 million hec-tares off Labrador South.

The sole criterion for the win-ning bids will be based on the total money committed to spend during the first nine-year period of the licence, C-NLOPB said.

The minimum bid is C$10 million (US$7.44 million, S$10.6 million) in work commitments.

All bids must be submitted by 8 November 2017 or 120 days after the completion of a stra-tegic environmental assess-ment of the Labrador Shelf off-shore area, whichever date is latest.

The C-NLOPB will confirm the closing deadline at a later date.

Mesa awarded US$146 million in Permian oilfield dispute

Call for bids in Labrador

CAROLINE EVANSHouston

Plans: CNH president Juan Carlos Zepeda

Photo: REUTERS/SCANPIX

ployees,” said Martin Craighead, chief executive of Baker Hughes.

“With a strong balance sheet and deep operational expertise, the new company will benefit from a sharp focus on pressure pumping to respond quickly to market dynamics and better serve customers. In line with our asset-

light strategy, this ownership model enables Baker Hughes to participate in the North American land pressure pumping market, while reducing capital intensity and maximising shareholder val-ue.”

Baker Hughes did not say when the deal is expected to be final-

ised, but noted that the agreement is subject to some regulatory ap-provals.

The news follows an announce-ment last month that Baker Hugh-es and US engineering giant GE are merging to form a new com-pany that will be majority owned by GE Oil & Gas.

With budget restrictions and cost cutting featuring prominently on the business agenda it’s easy to do away with the ‘non-essentials’.Some say paid-for industry publications fall into this category.It’s easy to say no. But is it wise?

Ninety-three percent of our subscribers are management. The fact is that the majority of these senior executives use Upstream and upstreamonline.com actively in their work. Whether it’s hunting for new business opportunities, keeping up-to-date with the latest industry developments, reading about competitors’ operations, checking market data and financials, or simply ‘getting to know first’, Upstream is seen as a valued tool. It helps them stay ahead, which is precisely why they’re willing to invest in Upstream’s exclusive, hard-hitting news. For them it’s money well spent and an investment in their work. To follow their example, just go to www.upstreamonline.com/subscribe


Scenes from the show Photos: OSEA

In the picture at OSEA...