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Gavin Stevenson, Managing Director, UniversalPegasus, UK

Gavin Stevenson, Managing Director at UniversalPegasus, offers a unique perspective on the company`s impressive 2013 growth, its international activities, and brownfield projects in the North Sea.

UniversalPegasus is the result of a 2008 merger between two highly regarded engineering and project services companies: Universal Ensco and Pegasus International. What was the rationale behind the merger, and why is UniversalPegasus interesting for the market?

Pegasus was a Houston-based company with a focus on the Gulf of Mexico, while Universal was the biggest onshore pipeline company in the US at the time. Universal had some international operations at the time, including a major pipeline project in Turkey for BP, which represented the biggest piece of the international business that they had at the time of merger.

The contract with ONGC in India and another with ENI were two major opportunities arising from the merger. We would not have received the ENI contract without the strength in depth and combined capabilities provided by the merger. Before, we were simply not big enough to take on that kind of contract, whereas the ONGC contract resulted from extensive contacts between ONGC and the Houston market. It was decided for geographical reasons to transfer the contract over to the UK, which is how we became involved. We would not have received those two major works if we had been standing alone in the UK, while the financial support that resulted from the merger was also an important benefit.

What have been some growth targets and how have they been reached?

We aimed to have a 20 percent increase on paper, while we actually achieved more than 30 percent growth. This year, we are projecting another 30 percent increase on paper, but we are hoping for significantly more. Going forward, we are going after the international market aggressively.

What were the main milestones of 2013 that helped you to achieve this 30 percent growth?

The key milestone was the Eni contract award since it was such a significant piece of work. The scope of the contract went way beyond the conventional Aberdeen-based project for the North Sea with 20-25 people working on the concept, as compared to the typical maximum of five for a typical North Sea subsea concept project.

Going forward, we have an 18-month backlog, versus the historical average for engineering service providers in Aberdeen of two to three months maximum. We can thus be a lot more aggressive and take more risks in terms of bringing in high calibre personnel, for example.

Our company is now of a size that it can provide the strength in depth of interest to our clients allowing us to expand our scope of services, which in turn enables us to create more opportunities.

In the UKCS there is a great desire to keep existing assets operating longer. Thus facilities will be required to operate significantly beyond their original design lives. This translates into a demand for expertise on making judgements on safety of existing installations. How is UniversalPegasus adapting to this trend?

Our main focus is the engineering side of these issues. A key concern in the industry at the moment is asset design life extension for anything from one to 30 years, which provides opportunities to provide engineering analysis and design support, including such issues as what is feasible from an engineering standpoint, what kind of remedial work is necessary, and what type of inspection has to be done, asset availability and safety etc. We have been awarded a lot of work covering these activities since we do not simply produce a theoretical study, but also engineer packages that include redesign, additional support, and remedial work. An initial study is almost always followed by the engineering re-design regarding what needs to be fixed or upgraded.

What are the advanced technologies UniversalPegasus brings to the table?

As an engineering consultancy, we sell ideas and expertise. If a client comes to the table with a problem, we act as a facilitator and provide potential solutions to that problem. We do not develop technology on the hardware side. Instead, we look at how to implement new technologies developed by companies from a system-engineering point of view. A lot of operators find it attractive to work with independent engineer contractors who can propose appropriate solutions but who are not single providers prejudiced by the goal of selling their own technology. We have no vested interest in sales of certain technologies and can thus remain independent.

Based on the broad scope of UniversalPegasus’ service offering, where do you see most demand from your oil and gas customers?

From a North Sea perspective, brownfield projects represent 75 percent of our offer versus 25 percent for greenfield projects. These brownfield services, which essentially involve keeping assets operating, are much in demand. We deal with the usual wear and tear issues associated with ageing assets and recent issues have included dents in pipelines or cracks in conductors that need to be assessed as fit for purpose.

To date, what project are you the most proud of and best represents UniversalPegasus at its full capacity?

In the North Sea, we were the main engineering company for BP`s Endeavour project. We developed the hot tap for the Forties pipeline, which at the time carried around 40 percemt of the UK`s oil production. BP took on what was perceived as a very high-risk project, but, thanks to our experience and the integrated approach to project management, the project was successfully delivered.

A recent industry survey showed that 27 operators in the UK sector will spend an accumulative £10.4 billion on decommissioning in the next ten years. How well are you placed to grab the benefits of this?

For us, decommissioning is a fairly open and ongoing revenue stream since we can support both the operator and the primary contractor. Our main focus is always providing an engineering service, regardless of whether it is for brownfield, decommissioning, or renewables.

But frankly, I believe that the era of decommissioning dominating the North Sea market is a decade away. Decommissioning will mainly be an offshoot of activity with existing clients, not something we will actively build. I am not convinced that we need to build a separate decommissioning division since we can service this activity on the back of already existing client relationships.

With which companies are you active abroad?

Internationally, we work with companies including ONGC in India, Eni, and other major global E&Ps including BP, ExxonMobil and Chevron, either from our Aberdeen or Houston office. Africa and India are currently our key international markets where we have a good foothold that we are developing via our UK and Houston offices. These international markets offer access to major greenfield developments ranging from pre-concept through detail design and project management services.

What is your strategy to attract and retain the best personnel?

It is a broad-brush stroke to say we need so many engineers since there are very different demands within the oil and gas market depending on the sector. There is a clear shortfall in the subsea market, which has always existed historically. However, a project like ENI, which offers a unique opportunity to work on a global-sized project, sells itself. In my experience, if you have attractive projects, you attract the right people. With such projects, we also find people that come on board because the work interests them rather than the package.

In the background, we also try to ensure that you have good relations with the recruitment agencies as well. This is a long-term strategy that we try to incentivize for both sides.

Finally, we successfully cross-share work with our Houston office, which is something that we want to continue to do in the future. The offshore division in Aberdeen is 55 and growing, while UniversalPegasus`s overall offshore division totals 250 plus and 1500 plus when the onshore, international and field services divisions are included. As such, we can use personnel from the Houston office to fulfil our short-term needs. Last year, US support represented 10 percent of our turnover. This is effective for us because we do not need to bring in people for short-term contracts, as we prefer hiring new personnel for the long term.

You doubled in size in 2013. Do you plan to replicate that in 2014?

I do not think we will double in size, but we plan to bring another 20-30 people on board in Aberdeen. We are also growing in London and bringing in international deepwater expertise in that office. It is unique that UniversalPegasus as an Aberdeen-based company has been awarded two deepwater contracts. Historically, Houston or London were the centres for this business. We are now trying to get out the message that we in Aberdeen are active in the deepwater engineering market. For the future, we are looking at how to continue providing technology and expertise from Aberdeen for ever-deeper and more hostile waters.
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