Brian Blackbeard – CEO, Atlantis Corporation, South Africa
Brian Blackbeard, CEO of Atlantis Corporation, shares the major milestones of their key projects, FerroMarine Cape and FerroMarine Africa, the value they provide to the global oil and gas industry, his long-term entrepreneurial investment strategy, and his positive outlook for the industry.
Brian, the global oil and gas industry has experienced a difficult few years but with oil price reaching USD 70 per barrel, what is your outlook for the industry looking forward?
“As South Africans, we pride ourselves on our ability to be flexible and innovative. No challenge is too big for us, no problem too difficult to solve.”
As a company, we have remained invested in the sector despite sustaining losses during the downturn of the past two years because we believe that the market will turn. Although the oil price has been beaten down by technology and changing demand patterns, for instance in the automobile industry with the move towards electric hybrid vehicles, nevertheless it remains the case that certain industries cannot operate without crude oil. With reserves having been consumed in the past few years and very little new development in the past few years, I expect to see increasing offshore E&P activity within the current five-year cycle.
Furthermore, there is significant upstream potential within South Africa itself. The major roadblock at the moment is the Mineral and Petroleum Resources Development Act (MPRDA), which initially had introduced fairly demanding free carry rights for the government, resulting in a general reluctance amongst oil majors to explore in our waters. However, with the new political climate, there is an expectation that this bill will be revisited, which will then open the door for majors to return to South Africa. We heard very encouraging news recently that Qatar Petroleum has taken a 25 percent stake from Total. When these companies return, they will certainly require all the services that we can offer at our facilities.
This is why, while many of our peers and competitors have left the industry, we have remained invested and we are holding our position. When the industry picks up again very soon, we will be extremely well positioned to capitalize on the upswing.
It is not easy to invest countercyclical, particularly as many of your peers have disinvested from the sector in response to the downturn. How do you manage the volatility?
Having a long-term view is extremely important. We are supposed in this by our international partner, MPC Group, who is also a very entrepreneurial company with assets in the maritime industry, which means that they are very committed to the sector.
We share the same entrepreneurial mentality and long-term outlook, which means that we are able to look forward and take calculated risks in order to be present when the market turns for the better again.
We had the pleasure to meet you in 2006 when the two projects you were working on, FerroMarine Africa (FMA) and FerroMarine Cape (FMC), were only concepts on paper. Over a decade later, your dream has now materialized. Could you tell us more about both facilities?
FerroMarine Africa (FMA) is a multidisciplinary fabrication and logistics facility located in Saldanha Bay (120 kilometers north of Cape Town) covering an area of 220,000 square meters, with its own quayside providing access to the open sea. We already have all the infrastructure so potential clients do not need to undertake significant infrastructure and financial investments.
In addition, Saldanha Bay is the largest natural deep water port in the country, and therefore extremely well-suited for the import and export of large fabrications and marine structures for both the oil and gas, and marine construction, sectors. We are also currently developing the facility to ISO 30000 standards.
As of 2013, we also host the global oil and gas industry co-operative Oil Spill Response (OSRL), which offers subsea well intervention systems for swift deployment to any subsea well failures in the entire region. We are one of their four global locations, in addition to Singapore, Brazil and Norway, which is testament to the value we bring to the global industry. We have a long-term partnership with them and we made it very easy for them to establish themselves in Saldanha Bay as we provided all the workshop, facilities and infrastructure they required. It is also a great boon to South Africa’s standing as a service hub as we now have the strategic capabilities to handle any well intervention and environmental work.
Coming to FerroMarine Cape (FMC), it is a world-class dedicated repair and upgrade service hub for the offshore oil and gas industry, located on 50,000 square meters of land adjoining the A-Berth quay with comprehensive facilities and infrastructure. It also has a robust track record as we have had internationally renowned South African service provider DCD Marine as a tenant for the last couple of years.
We recently made the decision to extend our capabilities and are looking at acquiring our own ship/rig repair company so that we can reinforce the facility and continue the legacy of Cape Town as a global service hub by offering the complete shipyard service as both landlord and operator.
Given your focus on the oil and gas sector, how did the company weather the fall in oil price and subsequent drop in activity globally?
Certainly, both facilities have been affected by the downturn in the past few years due to the drop in demand for offshore products, services and fabrication work. As a result, we are looking at a fairly small order book at the moment but as mentioned, we are confident that the industry will pick up again.
However, we have identified a huge opportunity in the downturn, which is to turn FMA into a world-class end-of-life ship and rig decommissioning facility. As we have our own quayside and ample laydown area, we have all the necessary workshop facilities and infrastructure to undertake large-scale environmentally compliant recycling and decommissioning. This will also leverage on the excellent skills base in South Africa, our mature marine and offshore services sector, and compliance to all the international standards. We are currently looking at the relevant legislation as well as identifying and vetting all the necessary subcontractors for such an undertaking.
Through our international partner, Hamburg-based MPC Group, we are also able to leverage on the expertise and knowhow of their specialist recycling company, RSH ReShip GmbH, which will form part of our joint offering to the global industry. Essentially, they will be the actual acquirer of the assets while FMA will be the refurbishment and recycling facility. There is already a structure within the global organization to execute this.
The idea is to create what we believe will be the only rig recycling facility in the southern hemisphere, which will be highly attractive to the global industry. From a geographical point of view, we are also in an excellent position as most end-of-life vessels come around Cape Town en route to Southeast Asia or China for decommissioning. Saldanha Bay could potentially offer a very attractive alternative that will save them significant time and travel distance, ultimately providing huge cost savings.
I fully expect FMA to be ready to receive our first platform within six months.
We have been able to win work for FMC as well despite the downturn by identifying our clients’ needs. For instance, we did the warmstacking of Noble Drilling’s Globetrotter 2 for six months. While warmstacking is not the most lucrative work, it is strategic from a longer-term perspective as it means we have first choice of work when the market does pick up and the vessel is activated, because the vessel is already here. As long as we have all the expertise and facilities necessary to support the work, it makes sense to award us the work as the vessel is already in our backyard. Again, it is about taking a longer term view of industry conditions.
Could you highlight some flagship projects that showcase your expertise and capabilities?
For FMC, I must mention the Scarabeo 7 project for Saipem, which was a large and successful project with 1500 people employed on-site. It created huge work opportunities and made a massive economic contribution to the Western Cape, and I am very proud that the project and its socioeconomic impact was recognized by the Western Cape Minister of Economic Opportunities Alan Winde. This is the kind of work we like and are capable of performing.
For FMA, I would like to highlight the production of five fully pressurized tankers for the ZAR 1.2 billion Sunrise Energy project in Saldanha Bay, which were built entirely from scratch in that facility, leveraging on our heavy engineering capabilities, welding expertise and large workshops.
On a last note, within the global industry, Norway is recognized for its cutting-edge technology and Singapore for its efficient quality service. What would you like the South African brand – and FMA and FMC – to be known for?
As South Africans, we pride ourselves on our ability to be flexible and innovative. No challenge is too big for us, no problem too difficult to solve. With the embedded engineering skill capabilities in this country and the innovation that we are known for, we can participate in any major offshore project.