Drydocks World CEO Geoff Taylor reveals that the global shipyard owner is unleashing its EPC and project management ambitions with a firm eye on upstream offshore work
Drydocks World is outgrowing its reputation for ship repair and maintenance and is making a substantial grab for a slice of upstream contract work.
With new vessel building, rig refurbishment, repair and new builds, and a raft of offshore packages already under its belt, chief executive officer and executive chairman Geoff Taylor says its time for the group’s yards to take the next step and announce its arrival in the EPC and project management sector.
“Ship repair is still a major and significant part of what we do, but we do a huge amount of rig refurbishment as well, so we are actually bigger in offshore than many people expect. For example, right now in the Dubai yard we have one semi-submersible, one jack-up rig, as well as the usual array of FPSOs.”
The company has a strong pedigree in the FPSO conversion market, and through that work has built a valuable knowledge and skills base well suited to other major offshore work.
“From the Dubai yard we have also branched out into new building. This hasn’t been a huge part of the business yet, but we have done some very sophisticated projects, notably the Aker Solutions H6 E hulls and support structures, which was a substantial job. There is 15 000 tonnes of steel in each of those units,” says Taylor.
Following the group’s acquisition of yards in South East Asia (three in Indonesia and one in Singapore), the company has built upon a sound offshore offering, with primary areas of expertise in anchor handlers, big offshore structures and tugs. “Those yards have a heavy leaning towards the offshore market. We have several jack-ups in those yards right now,” he says
The upstream capabilities, and shift towards capturing more EPC work is a point Taylor is keen to get across. “Whilst ship repair and maintenance is a core fundamental part of the business – it is certainly not what we are limited to. We have expanded our business, importantly not by crushing more business into our existing yards, but by acquiring and equipping appropriate facilities. For example when we began new building work in Dubai we built a separate load out facility and workshops specifically for that purpose.”
Ultimately Taylor wants the company to move from being a contractor to carrying out EPC project work direct for the client. “We have made significant strides in that direction. We have sourced alliances and JVs with engineering and project management firms. All of the elements we have not historically had in house we will cultivate and incorporate into our overall offering.”
Though the focus will initially be on specialised offshore installations, the Drydocks World yard in Dubai new build facility has been built to handle anything up to VLCC size. “If the margins were right we are certainly capable of handling a job such as a newbuild FPSO, but there is around 40 000 tonnes of steel in a VLCC so that would be an important consideration if you were building in the Middle East,” explains Taylor.
The shift towards the engineering remit has been part of a natural evolution for the group. “We have been a construction contractor now for many years, progressively taking on more of the engineering involved too. Some clients are happy to let the yards take the engineering because it can be much more efficient. If you are doing your engineering remotely, then when construction issues arise it can take time to get that remedied, which actually frustrates the ongoing work. Sometimes a solution may be agreed upon which has knock on effects for work which has continued, so we think it’s a better service to offer a more complete package.”
Taylor says the roll out of EPC capabilities will happen on a case by case basis. “Some customers still want control over all of the topsides work, for example, but we could take on all of the marine engineering work. In a measured and controlled way we are looking to take on more of that engineering work.”
With the facilities and the resources the company can call upon from its global network of yards and staff, supplemented by suitably qualified JV partners, Taylor says it would be ridiculous to think the firm would not eventually move into that market. “There are many players in the field, much smaller than us, who take on EPC work and then sub-contract out huge amounts of the engineering, essentially glorified construction yards, but they’ve taken more risk away from the client, so that trend has grown.”
New build offshore modules is an area Taylor says the group is likely to take an active role in. “We have seen, around the world that a lot of major module projects are held up by complications in design and parallel engineering. The key factor to the end user is hitting their delivery dates. We don’t make any money with vessels hanging around in our yards, so getting the vessels out on time is essential to both us and the client.”
FPSO and jack-up work has proven the group’s capabilities, though Taylor insists that, despite boundless ambition, the company is clear on where limitations do lie. “If it comes to something complex such as an advanced compression unit, then we will be in a position to say we have a strategic partner embedded within our organisation and they will have the pedigree that upstream companies look for.”
“If there is a job where external experience outweighs our own, we are in a position, or very soon will be, to bring that expertise in as part of our offering.”
The longevity of the downturn in terms of global yard activity must be drawing to a natural conclusion, asserts Taylor. He explains that when markets are depressed and owners choose to operate at maximum intervals between yard work, there comes a point where those rigs simply must come in.
“The fact that very little work has been carried out over the last 18 months suggests that something has got to happen pretty soon. Owners can’t do nothing for such an extended period of time. The oil price has been steady, and if anything creeping northwards and that suggests that investment will start to kick in again pretty soon.”
Maximising the group’s global capabilities will be the maxim that dictates its 2010 business ethos.
Growing the market’s awareness away from a Dubai-centric view of the company’s offering will entail a global effort, and one that will see the group assert itself ever-more prominently in the upstream sphere.
“The early indicators out there right now suggest that a cautious optimism is creeping back into the market. For oil and gas related industries conditions look more favourable now than they have for some time.
My goal is to make sure that by the time the market is back in full swing, Drydocks World is recognised as an EPC and project capable outfit, which has maintained its quality and reputation in our mainstream marine business too,” concludes Taylor.
