Hallvard Hasslknippe, COO, Technip, Singapore
Hallvard Hasslknippe, COO of Technip‘s Subsea division, gives an insight into the nascent potential of APAC’s subsea market and expands on how the French energy engineering and manufacturing giant is poised to capitalize on Singapore‘s forecasted upstream growth.
Technip has won some high profile and diverse projects inAPAC. Can you expand on some of the core projects and the strategy behind attaining them?
In today’s market, a major subsea project would be considered from 500 million to over one billion dollars. In this region, Technip has sizable projects in the range of two to three hundred million dollars, like the Wheatstone project in Australia. Furthermore, we have a very interesting project in China with COOEC called Panyu 34-1 and 34-2.
We have also been awarded a large subsea installation contract by Shell Development (Australia) Pty Ltd for the Prelude Floating Liquefied Natural Gas (FLNG) facility. The latter, incorporates our focus on FLNG where we strive to deliver the whole package, including the subsea service.
The strategy implemented varied to each project accordingly. The strategy towards penetrating the Chinese marked was based around teaming up and forging strong links with COOEC. Indeed, we have extended our relationship with COOEC through establishing a joint venture with them for future deepwater projects in China. For Prelude, the angle focused on offering a seamless and integrated package to Shell. Finally, the strategy to attain the Wheatstone contract was through a traditional bid process. We leveraged the fact Technip has developed a strong engineering and management footprint in Australia and also illustrated that we could offer internally all the necessary vessel spreads and equipment.
What have been the principle challenges you have faced in managing a business in such a diverse and vast region?
In such a diverse region, it is crucial that we offer our customers the full Technip portfolio and competence. It is equally important to provide our clients with a local competence. We have a regional model and within this framework, we have a significant local footprint through execution centers attached to where the business is closely cooperating with our clients. Indeed, leveraging these regional and local synergies is a central feature of Technip.
One of the strengths of Technip is its strong focus on cutting edge technology and our project execution model. Moreover, in our subsea division we are a group where we sit on and control the subsea assets. We also have a product line, so we are vertically integrated, which is pretty unique in this industry. Furthermore, our diversified project portfolio enables us to deliver profitable growth. We continue to target projects on which we can add value and execute profitably.
There was huge potential for Technip’s subsea division in APAC because of the opportunities in the deepwater market. Two years later, how have you taken advantage of this nascent potential?
Deepwater is clearly one of the key areas for Technip and the industry. In general terms, because a larger part of the region’s ‘easy’ oil has been extracted, projects are becoming increasingly large and complex. As a consequence, it is critical to have the right tool kit to supplement and service this sector transition. Answering this need, Technip has either developed or acquired the necessary assets and technology.
In Indonesia, we are establishing a subsea group in Jakarta, with the rest being supported from our network in Singapore and Kuala Lumpur. In Myanmar, it is still in the early days but it is a fascinating market for a couple of reasons. Firstly, there is colossal deepwater potential and secondly, there is a very complimentary installation season to the remaining of the region. Although the development projects will need another few years to come to fruition, there has been already, for a number of blocks, a large round of applications for operators in the deepwater sector. To capture this market, we have opened an office in Myanmar in 2013 and are training 20 engineers in Kuala Lumpur and Bangkok. These are further examples of endeavoring to build our local competence and capabilities.
Finally, Australia has profound deepwater potential and in the future it will become a prominent player in this sector.
The drilling services industry is very dependent on the strength of underlying fundamentals, such as the price of crude. How does Technip mitigate that considerable risk exposure?
One of the key strategic orientations of the company is to have a diversified and mixed portfolio, in terms of business activities (subsea, offshore and onshore) but also the type and size of projects, or geography. We continue to target projects on which we can add value and execute profitably.
The regional offshore services market is becoming an increasingly competitive arena. Could you give us an insight into durable competitive advantages Technip has over its competitors?
Technip offers solid core benefits to our clients. Firstly, as discussed, we have the strength of a multinational group and we are focused on execution, meaning we will deliver projects we are assigned to. Secondly, we are market leaders in terms of the technology we apply. Thirdly, we are a vertically integrated company, which gives a huge benefit to the client as it means they have a contractor that can install products he is familiar with and we can implement any evolution if necessary. Our organizational structure allows us to offer a local, efficient and responsive service to our customers. Finally, we have a high focus on people competence and QHSE. The latter is a key value to succeed in any market.
How important to the company’s long-term growth strategy are Technip’s activities in SEA in terms of revenue and business sustainability?
This region is key to the company. APAC is a growing market. Furthermore, the importance of Asia and Asian companies is increasing globally and as such, it is important we position ourselves to capture that growth potential and consider partnering with the emerging contractors and operators.
What are the key challenges that could hinder the growth of the APAC upstream market?
One of the main challenges is ensuring that all players operate to a high standard in terms of quality and safety. As the market is shifting, many operators are becoming influenced by oil majors and are starting to follow their stringent HSE processes. It’s also high on the agenda for the NOC’s.
Furthermore, managing the diversity of this region iso key. Each country has its own nuanced, cultural and economic approach. In addition, our client mix is diverse: NOC’s operate in different ways to the IOC’s. As such, it is important to have a tailored approach to each entity and be knowledgeable of the local environment that we are operating in.
Technip has an important role in helping to develop and enhance the operating standards of the industry in this region. We receive a plethora of good feedback from our clients, particularly in safety. For instance, we run a special program called Pulse, which is a behavioral based program where we train everybody in Technip. This program has now been incorporated into a few of our main clients. Having said that, continuous improvement is also a key Technip focus, as we strictly apply an ambitious health, safety and environment policy as well as an uncompromising security strategy.
Technip has had a presence in Malaysia for more than 30 years now, and as such we have a strong track record here so this made the country a natural destination to locate the hub. In addition, Malaysia, like Singapore, is located in the geostrategic heart of the APAC region.
Furthermore, Malaysia has a lot more space than Singapore. In terms of large-scale preparations for growth, in recent years the company invested into the APAC region with the construction of the Asiaflex Products manufacturing plant at Tanjung Langsat, Malaysia. It would have been difficult to construct such a plant in Singapore due to land constraints.
What is the role of the Singapore office in supporting your APAC operations?
There are two parts making up the Singapore office today. Firstly, as a consequence of acquiring Global Industries in 2011, who had their regional head office in Singapore, we have developed our local subsea footprint there. Having this presence has allowed us to tap into the Singaporean talent pool, which is notoriously competent and productive. Secondly, we’re operating our global marine resource pool out of Singapore.
Looking ahead, how would Technip APAC presence have evolved in three years time?
Certainly, we endeavor to continue the regional growth of the company; we are determined to increase the development of our activities in APAC. Moreover, over the next few years, we certainly plan to become even more engaged in deepwater activities. Ultimately, a substantial part of the next phase of growth lies in the FLNG market in Australia and we are well poised to capitalize on that opportunity.