Bahrain’s ASRY shipyard is booming thanks to an impressive stream of jack-up repair and upgrade work. Oil & Gas Middle East meets CEO Chris Potter at the iconic yard outside Manama.
With a pedigree stretching back to September 1977, the Arab Shipbuilding and Repair Yard (ASRY) in Bahrain continues to be a vital hub for offshore and commercial repair business in its corner of the Gulf.
However, the yard’s 35 years of experience is only part of the reason for its leading position. Innovation has been pivotal as well, with a string of recent diversifications maintaining its leading reputation in the region.
Proximity to Saudi Arabia’s active offshore drilling scene has helped the major drydock facility boost business in recent years, capitalising on a slew of jack-up repair and upgrade jobs.
Chris Potter, ASRY’s chief executive officer, met with Oil and Gas Middle East in February to discuss how integral the oil and gas support business has been to bucking the global downturn and delivering target-busting performance in 2011, and why he’s optimistic about the year ahead.
“The decision taken by the board four years ago to diversify and not focus wholly on the commercial ship repair industry, and to dedicate some of our capacity to naval repair and offshore repair work, has proved a very wise move and has enabled us to meet our ambitious targets,” he says.
Today, commercial ship repair accounts for around 60% of ASRY’s total revenue, with the offshore division responsible for the remaining 40%, withnaval vessel work generally reported under the ship repair unit.
“The offshore division is primarily dominated by jack-up repair and upgrade work. ASRY is now beginning to position itself as a reliable partner and service provider to the offshore industry,” says Potter.
The Bahrain yard has maintained its manning levels over the last three years, and currently has 5,400 people on site.
Solid volumes of work for offshore support vessels is an area the company has always seen performing well through its ship repair business. Developing that business stream took on a new dimension in 2011.
“Towards the end of 2011 and beginning of 2012 we established an offshore support centre to support the drilling activities taking place off of Bahrain.
The company has extensive quayside and jetty space and the sort of infrastructure that people need to support offshore operations whether they be in Bahrain or other countries nearby.. “It’s a minor part of the business at the moment, but it is something new which is working well,” he says.
KSA business boom
The proximity of ASRY to Saudi Arabia and a lot of the drilling activities being undertaken there by Saudi Aramco has had a significant and positive bearing on the yard’s offshore division development.
“Throughout 2010, 2011 and what looks to be a busy 2012, Saudi Aramco has remained very active. They have been bringing more rigs into the area which has helped us win new business,” Potter says.
Saudi Arabia accounts for the majority of the rig work ASRY has been involved in. Given its fortuitous physical location, the yard is ideally place for owners of rigs which are operating in, or are being transported to Saudi Arabian waters.
“We have also undertaken some repair and upgrade work for rigs which had been operating in Qatar, and in the last couple of years we have carried out repair work for rigs which had been operating in India,” says Potter.
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Expansion plans
To accommodate its offshore industry hub ambitions, ASRY embarked on a major yard expansion programme some years ago, and the full fruits of that investment are coming to bear this year.
“Our $188 million expansion plan consisted of development of the new slipways, which were completed in 2009, plus the introduction of a new 1.4 kilometre repair quay, which was officially opened in December last year,” he explains.
In addition to these core infrastructure projects the yard has undertaken the development of a fabrication area and a space where it is developing workshops and more facilities. “As we move through 2012 we’ll see these developments come to a close and we’ll be ready for new projects. All of these are about 95% complete.”
To handle the offshore fabrication jobs the company is targeting, it has created a 60,000 m2 construction area plus a heavy load out quay.
“The ground we’ve put in place is rated to take 80 tonnes per square metre. We have also invested in new cranes there and new facilities and workshops which will handle piece parts and final assembly.”
ASRY’s yard and facility was originally developed to deal with VLCC size vessels, maintaining this part of the business is key . The advantage of the new slipways is that the yard can handle smaller vessels without impacting the drydock space when larger vessels are under repair.
Potter says that with the new quayside area so close to completion, there is the potential that ASRY will be able to put the new industrial areas to good use with some specialist offshore fabrication work.
Look Ahead
Potter says the success in winning offshore work to date has been ASRY’s intentional alignment with the needs of the regional oil and gas market.
“As a business we will remain focused on developing the offshore division and look to attract larger projects and to work with new clients.”
The existing customer base and the wider strength of the energy sector has helped put the company in a strong position, and as such has managed to avoid the worst ravages of a globally slumping economy.
“We haven’t been affected by any distressed clients and all of our major clients have been excellent at paying for work done. We work with very robust companies throughout the shipping and energy business,” he says.
Potter explains that the only major issue which is impacting the volume and type of work carried out on the commercial ship side of the business is that owners are only carrying out works considered essential.
“The volume of vessels hasn’t changed in any significant way, but the total spend is probably a little below the historical average, or what typically could have been spent five years ago. The focus is maintenance as opposed to upgrade works. It boils down to the fact that all businesses are watching their costs and closely controlling expenditure.”
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New horizons
In addition to its ongoing endeavors in the offshore field, the Bahrain company has recently established an exciting new division, ASRY Energy Division, which is primarily being driven through a joint venture established with UK-headquartered Centrax.
The joint venture is set to equip a multi-application power barge utilising twin Rolls-Royce Trent 60 aeroderivative gas turbine-powered generator sets with the aim of becoming a leading player in the production of barge-mounted power stations.
ASRY will build a floating self-contained power barge that can be positioned in ports, on rivers or in sheltered coastal locations. At its heart are two Centrax-packaged Trent 60 generator sets producing a total of 125MW.
“The barge is designed to meet a broad range of power generation requirements and provides the flexibility to be positioned rapidly. Commercial applications include the provision of temporary power supplies during the construction phase of new land-based coastal power stations, enabling plant operators to sell power well in advance of the new plant’s commissioning,” he explains.
The barge also ensures continuity of power supplies during major outages at existing power plants near estuaries, rivers or coastal locations.
“Power Barges can also provide emergency power in times of need and humanitarian and relief initiatives around the world could also benefit enormously,” says Potter.
The high power density and small footprint of the twin Trent 60 packages enable the barge to be transported readily from the ASRY yard in Bahrain and positioned to areas of need rapidly and with minimal coastal resources, where it can begin to deliver its high power output immediately.
The units can either be connected to the local grid or operated as stand-alone island plants, ready to run at 100 per cent load within just 10 minutes from cold start.
Looking ahead at work in 2011 and 2012, Potter says in terms of pricing, the market will remain extremely competitive.
“We are still as an industry facing the fallout of the global economic recession, and I’m sure it will remain competitive throughout 2012 and probably into 2013,” he says.
“An historically strong oil price is having a positive impact on the oil and gas side of the business, in the sense that it is supporting strong regional activity levels, but there are other factors such as owners tapping capital markets for work they want done, and that remains quite tight,” he concludes.
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Bahrain in the global spotlight: 2011 unrest
In 2011 Bahrain grabbed the attention of the world’s media following civil disturbances and unrest flared up in and around certain pockets of the capital city, Manama. Operations at ASRY were unaffected throughout, and the company took a proactive communication stance to assuage customer fears.
“The disturbances were in isolated pockets of Manama, all of which were about 10 kilometres away from where we have our operation. Also the proximity of the port, the airport, and the yard meant there was no impact to our operation at all,” says Potter.
“With customer relations being one of ASRY’s key differentiators, we felt it imperative to disseminate information and regular releases to the market, which we did in a number of ways.
For those clients who had assets in the yard we spoke with them regularly and directly. For customers looking to come to our yard with new business we stayed in contact with them regularly in a proactive way and made regular statements to the maritime press too.”
