Henrik Fitinghoff, General Manager, Asia Pacific, MENCK, Singapore
“The growth of the deepwater theatre is inevitable because shallow water E&P is waning. The advantage Asia has is that there are a raft of state backed oil and gas entities that have a massive appetite for securing hydrocarbon and indigenous supplies because of the sheer demand challenges they face. Such a force will drive the development of this industry and I am optimistic that the region will fulfill its deep offshore potential.”
After 20 years working in the offshore sector, four months ago you joined Menck, transitioning to the drilling arena. What company traits drew you to Menck?
In the drilling sector, Menck is a premium brand. This facet is absolutely central in the sector because clients choose you not because of price, but because of one’s expertise and knowledge in the field. Such a sterling reputation gives Menck a lot of leverage and opens up an array of opportunities, especially in Southeast Asia. Furthermore, being a specialist in deepwater, which is undoubtedly a new frontier in Asia Pacific, only entrenches our strong brand and attests our decision to build a tangible and growing presence in this part of the world. Consequently, the opportunity to join and spearhead such an exciting aspect of Menck’s future growth story was something that appealed to me greatly.
In the first few months of setting up shop in Singapore, what have been some of the initial teething problems?
Perhaps the greatest challenge is finding the right people. In terms of our engineering and technicians expertise, we are trying to expand swiftly. It is vital that we find the necessary talent, aligning both with our corporate culture and armed with the necessary skill-set. Traditionally, in Singapore it has been a challenge to find individuals with the right technical background and who are willing to head offshore. Fortunately, Singapore’s offshore industry has evolved and expanded, providing people with the skill set and desire to go offshore.
Would you say there has been a mind-set change towards the engineering and offshore industry, which, for a long time, had seemingly been stigmatized in Singapore?
I do not think there has been a profound shift in the attitude towards this industry; nonetheless, people are realizing that there is an opportunity to enter a job market that is dynamic and potentially very lucrative. There are an increasing number of people who like to work with their hands and seek to steer clear from white-collar jobs. The engineering involved in the oil and gas industry is as fascinating as it is innovative. Engineering capabilities are constantly being pushed and enhanced. In Asia Pacific, as the low hanging fruit is removed, the industry is having to push the boundaries to extract hydrocarbons at an economical price. Indeed, Menck is able to operate in ultra-deep water because we have developed a power pack that sits on the hammer and can actually go down with the hammer. Ultimately, the oil and gas industry is an incredibly exciting and interesting sector to forge a career.
Launching Menck’s regional headquarters in Singapore in 2013, why was Lion-City in particular selected to be the hub?
Clearly, the location of Singapore is enticing but Johor and Batam are in central locations too. The acute distinction is that the ease of getting equipment in and out of Singapore is unparalleled and for a company like Menck, this is crucial. Our hammers go out for a job and they need to be exported promptly, and when they come back in, it needs to be done efficiently. We cannot afford any hold up or delay. Furthermore, there is a lot of direct shipping and flights from Singapore to all corners of the world, speeding up all our operations and allowing us to serve our clients in a timely manner. Moreover, the bulk of our existing clients are based in Singapore and in our efforts to establish new client partnership in the region, we are not far away. Ultimately, Singapore’s smooth and mature business platform facilitates business generation.
How does Menck’s Singapore base aim to support the regional offshore industry and supplement its development?
Most of our clients are subsea engineering clients and they vary in size. By being here we can discuss projects in detail with them, provide engineering solutions and more readily discuss how our services can support them. Importantly, we can do this in real time. Furthermore, we can draw upon the know-how of the Acteon companies, and through our sister firms we can offer our clients an integrated subsea package. One fundamental benefit of being close to the client is that you get the feel for what future services and equipment they will need in their portfolio. Receiving that feedback and channelling it into our R&D team in Germany will be a key driver of the company’s innovation strategy.
After 20 years of offshore experience in Asia and Australia, one trait that stands out is that offshore companies tend to be more innovative relative to other regions. Since these companies often do not have access to the sophisticated equipment found in the North Sea, they find innovative ways of doing more with less. They always find approaches of undertaking operations in a quicker and cheaper manner. This region is acutely cost conscious and that feedback is drilled into us.
Do you feel that in seeking cheaper and more efficient approaches to offshore operations, regional safety and environmental standards are undermined?
Over the last 20 years, regional offshore safety standards have improved markedly. Overall, there is a far greater focus on safety; it is no longer deemed acceptable to have accidents offshore. Regulatory initiatives and industry sentiment are changing attitudes towards thorough offshore training. The innovation and transformation in attitude is improving safety significantly.
Menck is renowned as a global leader in providing offshore deepwater drilling solutions, yet some executives argue that despite lots of talk about this upstream field, there is little action taking place. How do you view the deepwater market in Southeast Asia?
Over the last few years there has been a surge in enthusiasm surrounding Southeast Asia’s deep offshore potential. In Indonesia there has been plenty of E&P activity but not a lot of success. Malaysia had a swathe of success in the early part of the century, with Shell and Murphy pioneering the development of the region’s deepwater expansion, but the strong trajectory has flat-lined in recent times. Due to the mountainous cost of deepwater activity, confidence can fluctuate quickly depending on results. A few dry wells can breed a domino effect of uncertainty. As a result, there has been an uplift in due-diligence activity, with companies wanting a greater level of commercial certainty before venturing into this market.
Nonetheless, the growth of the deepwater theatre is inevitable because shallow water E&P is waning. The advantage Asia has is that there are a raft of state backed oil and gas entities that have a massive appetite for securing hydrocarbon and indigenous supplies because of the sheer demand challenges they face. Such a force will drive the development of this industry and I am optimistic that the region will fulfill its deep offshore potential.
With local and regional competitors emerging in the drilling services sector, how is the company positioned to compete against these cheaper companies?
Menck has over 40 years of expertise in subsea pile drilling and therefore we have an established track record in the subsea engineering sector. At the moment, we do not really have any local competitors. New companies may be able to do the same job but they have not had the longevity we have had and that matters in this market. Moreover, we operate in a niche market where scaling up operations is difficult and therefore is not a natural investment route for regional offshore players. Menck can offer clients such as Technip the knowledge, skill-range and patented equipment needed in this market and that gives us tremendous market clout.
How are you planning on establishing partnerships and alliances in the region?
Though a substantial chunk of our clients is in Singapore, we do have clients spread throughout Asia Pacific. Consequently, we will go out and travel. We want people to know who we are and where we are and that we are here to do business with them. We are constantly moving forwards; we never sit still and rest on our laurels.
How important is Southeast Asia to Menck’s goal of achieving long-term growth?
Southeast Asia is vital to the company’s long-term growth strategy. Singapore is the first major facility office outside Menck’s headquarters in Germany and this indicates towards where the business is globally navigating. Already we represent a large proportion of the business and this slice of the pie will only expand. The European oil and gas market is mature and solid, but it is not growing quickly. Conversely, Asia has a huge appetite for energy and in particular hydrocarbons. The nation states of ASEAN would prefer to have their own indigenous supplies of oil and gas and the NOCs are pushing hard to extract from this region. Menck is well positioned to capitalize on the surging, regional momentum.
If we were to fast forward three years, what do you envisage the status of the company in Southeast Asia to be?
By 2017, we should have doubled our business in this part of the world. We should be a fully established company, offering the same services as Menck does in Europe. Finally, I would hope we are a source of innovation for the company, driving Menck’s technological advancement.
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