Michael Simm – Executive Vice President, Middle East and Asia Pacific, Penspen, Abu Dhabi
Penspen’s Michael Simm reveals how the Middle East is a heritage region for the company, how building relationships with local operating companies has been key to their success, and why now is the ideal time to transition to a new business model, changing the way the industry delivers projects.
Penspen recently started a four-year contract as a project management consultant to ADMA-OPCO at Das Island. What does this deal say regarding the impressive growth in your offshore business and your strong relationship with key stakeholders in the UAE?
Penspen has been active in Abdu Dhabi for almost 40 years, having first set up an office in 1978. Historically, our focus has been oil and gas and over the years we have developed this capability and diversified into areas such as water infrastructure and aviation fueling. Key to that has been our relationship with the local operating companies. We have built a relationship with ADMA-OPCO over a number of years. In January 2016, we were appointed as a project management consultant to ADMA-OPCO, on a four-year contract, for the ongoing work on Das Island, the main industrial center of offshore oil and gas production in the country. Our role is to oversee on behalf of the client the Engineering, Procurement and Construction (EPC) contracting work currently underway. This is a model that the UAE is increasingly turning towards, with a focus on obtaining better value from their oil resources.
Today Penspen has 21 offices and experience in over 100 countries. From the Abu Dhabi office, you are responsible for projects across the Middle East. What is the strategic importance of your presence in this region and Abu Dhabi, in particular?
As a company, our focus is on four regions: the Middle East, Europe and Africa, the Americas, and Asia Pacific. The Middle East is a heritage region for Penspen. We are a member of the Dar Group, a Lebanese multi-disciplinary consultancy group, with a strong focus on this region of the world. We have always found the Gulf Cooperation Council (GCC) region, and Abu Dhabi in particular, to be an excellent environment to conduct business in. Penspen operates in an ethical and transparent manner, compliant with the UK Bribery and Corruption Act and the US Foreign Corrupt Practices Act (FCPA).
In this context, we find the open and ethical business practices in Abu Dhabi make it an ideal country to conduct business in. The bidding process is extremely fair and transparent. If you qualify from a technical standpoint, the price then becomes the key differentiator. I cannot think of another market that presents a better overall working environment furthermore, the work is incredibly interesting from a technical point of view. The scale is extremely large, but there are also opportunities to tackle smaller but very technically challenging projects. In this difficult period for the global oil and gas market, we are as committed as ever to investing in this country.
Olaf Grimm, managing director of Sigma´s oilfield division, was telling us how the UAE´s commitment to a long-term vision has been key to its current prosperity. Do you share this perspective?
Whether the country will achieve its target of increasing oil production to 3.5 million barrels per day by 2018 is a source of much debate within the industry. What is not in doubt is the authority’s commitment to the roadmap that has been set. From the birth of the UAE in 1971, Sheikh Zayed bin Sultan Al Nahyan, the country´s founder and first president, had a clear vision, which has been central to the country´s prosperity. At its heart were values such as openness and transparency, and they are now deeply embedded within the country´s DNA. This has absolutely set the foundation for the UAE’s enviable achievements today.
You have been responsible for Penspen’s Middle Eastern operations since March 2015. Upon your appointment, what specific objectives did Peter O’Sullivan, Penspen’s global CEO, task you with?
In 2015, we transitioned to a regional business model. Previously, I was responsible for our global engineering and project management service offering, while based in London. My role was to support this aspect of our business across all our markets, including UK, USA, Mexico, Thailand, Singapore and UAE. As part of a strategic review conducted 18 months ago, led by Peter O’Sullivan, who joined as CEO in 2013, we decided to structure in order to better align ourselves with the specific needs of our clients in each region.
My task has been to consolidate and grow our Middle East and Asia Pacific business from our base in the UAE, growing our engineering and project management and integrity services but also developing our asset management portfolio. This is something we have deployed very successfully in the US and the UK; our ambition is to import this expertise into this region in order to help our clients optimize their operations.
In September 2014, Penspen acquired DPS Engineering, as part of a strategic drive to increase the scope of services available to clients. What did this deal say about the direction of the Group?
When I joined the company in 2011, my role was to develop our upstream business. Previously, our focus had been on mid-stream transmission pipelines. Listening to our clients, it became apparent that their ambition was to move away from working with multiple consultants offering specialist services, working with fewer companies that could offer a broader scope of services.
Before our acquisition of DPS Engineering, we had limited expertise in terms of the separation of oil and gas from water, and other primary treatment processes. It was a great fit because we already had had a successful working relationship with DPS for a number of years. Penspen was looking for a company that could conduct the process facilities design of both offshore and onshore oil fields. In integrating DPS into Penspen, the mobility of our employees has been crucial. Ultimately, we see ourselves as a very flexible and lean business, in terms of both the demands of our clients and the mobility of our people.
Last year, Penspen announced that it wanted to invest in a new office in Basra, Iraq. Looking forward, what importance do you attach to further extending your footprint in the Middle East?
We have a very targeted strategy when it comes to our global footprint, with a focus on the four regions I referred to previously. We are very active in Iraq from an engineering and project management perspective. We have successfully completed the provision of engineering and procurement services for the Al Fao Power Plant and have just recently concluded the detailed engineering of the Al Fao Pump Station Upgrade.
Abu Dhabi is our head office in the Middle East and we have satellite offices throughout the region. We have key engineering hubs in Abu Dhabi, and further regional presence in Doha, Saudi Arabia, Kuwait, Basra, and Erbil. We are currently undertaking a project to upgrade the fuel supply systems for several Kuwait power stations on behalf of the Ministry of Electricity and Water, and our intention is to strengthen our presence in Kuwait in 2016. Saudi Arabia is a particularly challenging market to enter, however we have supported Khafji Joint Operations for almost ten years and our asset integrity group has worked extensively with Saudi Aramco, and we plan to strengthen our local presence in Saudi Arabia. Iran is also a market that is attracting much interest with the lifting of international sanctions. Today we are discussing which services we will offer, from our engineering and project management services, to our specialist asset consultancy and asset management business.
We are also investing in education in this region. A number of years ago, we saw a real issue with the number of pipeline engineering professionals, with many experts exiting the sector. To help the global industry address this issue so we established a Masters in Pipeline Engineering in conjunction with Newcastle University. Saudi Aramco has asked us to provide a specific educational program to be embedded within its own business,
How is the company pairing the need for innovation and sustainability with the need for reasonably economic oil & gas projects?
We are looking at products where we can innovate in order to support the ADNOC Group of companies. In this regard, we are launching a service aimed at maximizing value from existing assets, called ageing life extension (ALE). Typically, an asset has a design life of 20 to 25 years. With this service we work to extend that timeline through inspection and analysis. Instead of investing in the development of a new asset, it allows an operator to get more out of their existing assets.
In these challenging times for the oil and gas industry, I believe now is the ideal time to transition to a new business model. From the owners, to the consultants and the contractors, I see an opportunity to change how the industry delivers projects in order to focus more on value and cost-effectiveness, for example by integrating operations and integrity management more closely. Beyond continuing to grow Penspen in this region, my ambition is to play a role in changing the delivery model in the GCC, and particularly in Abu Dhabi, where we have a historic presence.