Andrew Tan – Acting MD/GM, Chiyoda, Australia
Andrew Tan explains how Chiyoda, which has been building LNG plants in 40 different countries representing more than 40% of worldwide liquefaction capacity, is leveraging the breadth of their LNG expertise in Australia, notably in conjunction with the construction of the Ichthys LNG project.
You were appointed Acting Managing Director and General Manager for the Oceania Region in July 2015. What did you establish as your strategic priorities when taking over this position?
Our deep and long-standing LNG experience is an aspect of key added-value that we bring to the table
First of all, a huge part of our current strategic priorities primarily revolves around the INPEX’s Ichthys construction, as Chiyoda is part of the joint venture, alongside KBR and led by JGC, which was awarded the construction of the downstream LNG facility for the project. As a partner of this joint venture, we want to ensure that our contribution on this project is conducted with the best quality standards possible, while ensuring that safety remains absolutely paramount until the termination of construction. In this regard, Chiyoda can build out of the success in the construction of the PNG LNG project in Papua New Guinea, where we displayed more than 80 million man-hours LTI free. Our objective for Ichthys is to replicate this remarkable safety achievement in Australia. Secondly, we want to make sure the joint venture maintains the closest possible control on the construction operations in order to strictly respect our timelines and deliver the project on schedule. Finally, it is my goal to carry on the work which has been initiated by my predecessor and look at new business opportunities for the company in this region.
For the fiscal year 2014, Australian revenues amounted to US 1.26 billion, almost 30% of Chiyoda’s total returns. What do these impressive numbers say about the importance of Australia within the global strategy of the company?
Australia is a very unique market where the numbers may be relatively inflated because of the higher operation costs that we face in the country, while similar projects in other parts of the world would represent only a fraction of the Australian cost. As an example, labor cost would usually represent around 20 percent of the total cost of a given project, while in Australia it can go up to 60 percent. At the end of the day, the revenues that we earn in Australia would be very similar to any other place in the world.
Nevertheless, the Australian region remains extremely important to Chiyoda and we recently strengthened our commitment in the region. We notably own a majority share in Xodus, an upstream engineering consultancy company, who maintains one of their main offices in Perth. We also recently formed a subsea joint venture with Singapore-based Ezra’s EPCIC service provider EMAS AMC called EMAS Chiyoda Subsea, which began operations on April, 1 2016. Among the first activities on the agenda of this partnership, Ezra’s DP-3 ultra-deep-water multi-lay construction vessel Lewek Constellation will soon start some pipeline laying work for Woodside in Western Australia for the Wheatstone Project. Leveraging Xodus’s and EMAS’s expertise, we definitely identify growth opportunities in the subsea market in Australia. Chiyoda has historically and predominantly been an onshore LNG company, and thanks to these two new partnerships, we can now deepen our expertise in offshore and subsea projects. More than ever, Chiyoda stands as an integrated engineering company able to operate in an extremely wide range of projects.
Chiyoda is obviously part of the JKC joint-venture, which has been continuously involved in the Ichthys LNG project and has been supporting INPEX and TOTAL from pre-FEED and FEED to the construction phase. What sets the Ichthys project apart in terms of engineering ingenuity?
First of all, I would highlight that the Ichthys project is extremely important to INPEX, Chiyoda and for Japan as a country. From an innovation point of view, we notably implemented on this project a significant level of design modularity to facilitate the project construction. As you know, project construction in extremely remote Australian projects is an expensive exercise, which renders modular construction absolutely necessary. Although implementing modularization per se was not a world’s first, we implemented it on Ichthys at a scale that has not been done before. We also displayed pioneering construction approaches for the LNG storage tanks, such as the concrete roofs – which now stand at 47m high from the ground on top of two 165,000cum tanks- installed before the actual construction of the tank steel walls, in order to cope with the challenging weather conditions on the project site. These construction aspects stood as interesting engineering challenges for Chiyoda, and it clearly moved us forward up the learning curve in this capacity.
The Ichthys project construction is currently completed at more than 80 percent and we anticipate to have the first LNG produced during the early second quarter of 2017, while the project construction is slated to be fully completed by July 2017. To give an overview of the remaining milestones to achieve, all the building blocks of the project have already been completed, but we still have to build the ties between all these blocks.
Chiyoda has been building LNG plants that currently produce more than 40 percent of worldwide liquefaction capacity!
Within the JKC joint venture, how would you define Chiyoda’s specific added-value and expertise that the company bring to this project?
Without any doubt, our deep and long-standing LNG experience is an aspect of key added-value that we bring to the table: Chiyoda has been building LNG plants that currently produce more than 40 percent of worldwide liquefaction capacity! In this vein, Chiyoda displays a particularly valuable track record of successful past projects, forged by contributing to the construction of LNG facilities of various scales all around the world. Despite some unique features that are specific to the Australian context, operating in this country displays some important similarities with past projects in which Chiyoda has been involved, providing us with the ability to extract and leverage the knowledge we gained in other geographies.
On the other hand, by being involved in Ichthys construction, we have also deepened our expertise in some key construction aspects, such as modular design, which could now be leveraged on other construction sites all over the world.
Considering Chiyoda’s expertise and experience, the company is particularly well-positioned to offer high quality services for any phase of an LNG project’s lifecycle. How do you want to position the company for the operation and maintenance opportunities that are currently blossoming in Australia?
Historically, Chiyoda doesn’t stand as a company that would frenetically look at being involved in all kinds of different opportunities – we remain quite conservative when it comes to new business opportunities. We would of course envision to participate in other pieces of business operations as well as engineering maintenance in this part of the world, but we like to make very calculated moves, particularly in accordance with Chiyoda’s corporate philosophy. We definitely hold the expertise to pursue a wide range of operations, but we are also particularly conscious of what we want to do and the strategic direction we want to follow.
In Australia, there would probably be natural expansion and new business opportunities arising in the upcoming years, with regards to brownfield or upscale opportunities for instance. Nevertheless, once again, we will always remain extremely careful when choosing new development paths. We will never overstretch ourselves, and we want to ensure that we hold the right resources to make a success of any of our future contributions.
Looking at some of our key objectives for the upcoming years, we for instance want to further develop our subsea activities and jointly look at new business opportunities with EMAS Chiyoda Subsea and Xodus. Finally, being able to maintain our utmost safety standards on all our projects, and ensuring our staff can come home safely remains absolutely paramount to me and to Chiyoda.
From a personal standpoint, what keeps you motivated?
First of all –and it may sound a little bit strange- I work for company in which I have yet to find someone I do not like. Chiyoda also is a company where headquarters in Yokohama truly acknowledge and praise their people’s contribution to the company successes. At Chiyoda, I am also in the lucky position to be able to easily call upon my colleagues in other parts of the world and benefit from their unparalleled experience of this industry. If one of our partners encounters any kind of technical issues, I am able to talk to some of my colleagues who have been in our company for more than 40 years. Furthermore, it frequently happens that the engineers who designed a given project decades ago are still working at the company, which undeniably brings value to our partners and customers. In this regard, I feel blessed to be part of a company that has been able to gather and retain such an experience over the last decades. This is what keeps me motivated.