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Interview

Nils van Nood – Managing Director, GustoMSC – Netherlands

GustoMSC’s managing director shares his experience of mitigating financial and technical risk for his clients, new market opportunities in the Middle East and Asia and the company’s ability to seize the moment in today’s turbulent market

What is GustoMSC’s role as an independent design and engineering company for all types of mobile units and vessels for the offshore industry since 2011?

GustoMSC was family owned when it was started more than 150 years ago by our innovative founder, August Frans Smulders. His mindset has influenced the company throughout the years and is still very much part of our company DNA. Since the start of the company, our portfolio has diversified, and GustoMSC is currently an engineer, designer and equipment supplier. We do not have our own fabrication facilities, but we design the equipment, have it built, and commission it on board. We also provide services during the entire life cycle of our products.

What market growth did you experience after gaining autonomy from SBM Offshore and what have been the advantages of becoming a fully independent company?

After GustoMSC gained independence from SBM Offshore, the market experienced an unexpected bubble in 2013 due to the old age of the existing drilling jackup fleet, available yard capacity, companies willing to invest in new builds on speculation, and the availability of attractive financing in China. We consequently secured a large number of contracts, and we are still working on delivering these contracts up through 2016.

This newfound autonomy allowed the company to have a quicker turnaround period in approving projects and to become more flexible with our clients, which translated into the company gaining a larger market share during the peak of 2013. Additionally, we further expanded our independent position and are now able to work with all the yards in the world. We are currently working with approximately 17 yards globally, which include the world’s largest yards in Singapore, Korea, and China. Overall, our independence has allowed us to work more efficiently and grow as an organization.

With current market challenges causing service and equipment suppliers to reformulate their strategy, what solutions are your clients demanding most?

Presently, demand from our clients in the drilling market has decreased as a result of current market conditions, which limit the amount of activity for newbuild drilling units. Long-term developments are currently on hold and investment is low, but there are some newbuilds for specific projects, such particular high-spec jack-ups and tender drilling semis. Other niche markets we are currently servicing include the accommodation and maintenance market and the well intervention market.

With oil prices being much lower than they were a year ago, many Dutch companies are turning to innovation to lead the next big wave of economic success. What is GustoMSC doing to stay ahead of the game, and what projects does it currently have in the works?

Right now we are focusing our energy on improving the existing technology on designs to make them more cost effective overall. The same applies to our equipment, like our rack and pinion jacking systems, which we are optimizing for cost and performance. These improvements create savings and value for our clients and in return are a showcase for our company.

An exemplary design we recently put out is our Magellan drillship, which is capable of drilling complex 20 KPSI wells. The Magellan has received a lot of positive feedback from potential customers, and, once the oil price goes back up, this drilling ship will be at the forefront of deepwater exploration. In order to meet the demands of our diverse portfolio of clients, we also have smaller size units, such as the Scylax. This low-cost drilling vessel targets mid-water and deepwater operations in moderate environments. Both vessels are an evolution of our very succesfull deepwater drilling vessel, the P10000.

We also have new jack-up sizes, such as the CJ54, which is in the sweet spot and pushing the boundaries for certain operations in the harsh environments of the North Sea, as well as moderate environments, in deeper waters worldwide. In conclusion, flexibility and innovation is what ensures that GustoMSC remains at the top of the game and ahead of the competition.

GustoMSC is active in different market segments following the various stages of field development. How does this business model enable synergies and yield better results for clients?

This model provides the opportunity for the company to have business during both the peaks and troughs of the market. Typical markets follow the following cycle: finding oil, completing infrastructure, production, including maintenance and well intervention, and finally decommissioning. For our clients, this means they can continue to work with us throughout these cycles, while technology developed for one segment can be deployed in others. As an example, we have developed a series of accommodation jack-ups and production jack-ups based on the succesful CJ-series of drilling jack-ups. Positioning ourselves to be available for specific services during both the highs and the lows in different markets is a driving factor behind our business strategy.

GustoMSC has worked intensively with both Petrobras (delivering 15 drilling rigs for their ambitious pre-salt development project) and Statoil (delivering CJ70 jack-ups for their CAT-J project). How do you see further cooperation with NOCs as moving the business forward and what future projects do you have in the works?

We enjoy cultivating continuous business relationships, but business with operators typically intensifies when working together on specific projects. Our good cooperation with Petrobas was based on a project involving the development of a specific deepwater drilling vessel and semi for their 28 drilling rigs program, while our ongoing work with Statoil is based on their CAT-J project involving the use of large jack-ups in the harsh Norwegian Sea environment all the while pushing the limits for waterdepth. Moreover, we develop new opportunities to use the same platform on different fields, including innovative new design solutions extending even further the range of their applications.

What geographic region of the world do you anticipate as driving developments within the industry? How is GustoMSC responding to this dynamic?

Regardless of the geopolitical issues in the Middle East, GustoMSC still believes this region to be vibrant with regards to the oil and gas industry. The currently existing infrastructure is reaching an age when maintenance or modifications are necessary, and we see a market opportunity in this sense. The North Sea is another appealing market with many potential clients in need of our solutions. Finally, Asia is a region with exciting projects that require our services, and we see opportunities in Asia to extend our global reach and assist in new market niches.

With declining production levels in the Netherlands and many of your clients outside the region, what is the strategic importance of maintaining your headquarters in Schiedam?

The Netherlands is a knowledge hub with a rich maritime tradition. Moreover, the Technical University of Delft offers an abundance of talented and inspiring individuals, who look for work in our industry and want to contribute to its development. There also exists an abundance of businesses in the area that are active in our industry, which means that much talent remains locally. Furthermore, the Dutch mentality to remain open-minded and combine an enterpreneurial business sense with innovative technical solutions ensures this region of the Netherlands remains competitive.

With a competitive workforce throughout the Netherlands, what enables GustoMSC to gain and retain the right talent?

Engineers enjoy a good challenge and the organization of our company provides a great work culture with challenging projects in an intertnational business environment. The opportunity to learn day in day out and create best-in-class solutions on international projects is what makes our people tick. On top of this, we apply a sharing principle where our employees also benefit financially from the successes of our company.

GustoMSC has played a role in the design of wind turbine installation vessels in the North Sea. What reassurance does GustoMSC provide to its clientele in its efforts to promote its improved wind turbine installation vessel technologies?

Dedicated offshore wind turbine installation vessels were first deployed in the North Sea about seven or eight years ago. GustoMSC has been able to develop the NG-9000 windturbine installation vessels based on technologies that our company had already developed for much smaller civil construction jack-ups, but improved for continuous and frequent jacking operations. Our design of the NG-14000 for Seajacks represents another step change in size, although it is based on already-existing oil and gas technology for drilling jack-ups specifically adapted for this purpose, including a robust jacking system suitable for frequent operation. Allowing for our customers to upgrade in size or functionality based on proven technology significantly reduces their risk without making them play the role of guinea pig for new and unproven solutions.

GustoMSC plans to move to new offices later this year. How will this new office further help GustoMSC’s mission to be the pioneers of offshore engineering?

The new office is open, light, modern, and promotes mutual cooperation between colleagues as well as between the organization, clients, and the greater business environment. Cooperation is extremely important for our organization because it promotes innovation. We believe our new offices will create an inspiring working environment for our employees and provide an inviting space for visitors.

What qualities do you believe keep GustoMSC a notch above the competition?

We distinguish ourselves by having the best and most reliable products at competitive costs. Innovation, therefore, is key as is flexibility to adapt to customers’s needs. On the equipment side of the business, we do not have our own fabrication facilities. Rather, we foster excellent partnerships with our suppliers, thus ensuring that we can grow our capacity during market peaks and have a low overhead during times with lesser business. Our 200 employees always push the envelope to ensure our clients are happy with the end product. Moreover, we serve our clients with solutions and continuously improve our service portfolio throughout the lifecycle of the product. This is important as learning from our clients’s operations enables us to improve our products. GustoMSC is a company of pioneers who strive to anticipate problems and provide best in-class solutions.

Click here to read more articles and interviews from the Netherlands, and to download the latest free oil and gas report on the country. 

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