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Interview

with Bob Beavis, Regional Director Asia Pacific, Wood Group Singapore

04.10.2010 / Energyboardroom

Sir Ian Wood, Chairman of Wood Group has described how, at a Wood Group conference in Kuala Lumpur in 1995, he noticed that the group had completely transformed from a UK-centered organization into a strong international matrix of regional hubs. How would you describe the significance of the Asia-Pacific region for the group as a whole?

Asia-Pacific is a growth engine for Wood Group where the Group’s ambitions are directly related to ieconomic activity in this region. Asia-Pacific is not opportunity constrained. In India there are new opportunities and developments to allow for these opportunities and we also see emerging opportunities in China and further development in Australia for example.

2009 was of course a difficult year in the industry and Wood Group’s profits fell by 31% to £177m. What can Wood Group do to boost its revenues and recover after the crisis?

Key to Wood Group’s strategy is being active in growth markets and this explains the emphasis on Asia Pacific. It is essential to develop opportunities in Asia-Pacific using local resources and these need to be provided across the region. In terms of activity, the Group has established itself through Mustang Engineering in Kuala Lumpur to address the growing potential it sees in Malaysia. Wood Group Kenny also continues to be dominant across the region in sub-sea activities.

Therefore despite the crisis, Wood Group has enjoyed significant growth in Asia Pacific over the last two years. In 2009 Wood Group acquired three companies in Australia. This demonstrates the ambition of the group and reflects its growth aspirations.

What defines Asia-Pacific as a region for Wood Group?

It is predominantly defined by geographical boundaries. However there are global connections. For example Wood Group Training is a global subsidiary headquartered in Perth in Western Australia. This has businesses in the USA, Kazakhstan, Egypt, Tunisia and Libya managed from Asia-Pacific. There are also Wood Group African contracts which are corporately administered in Asia-Pacific. This capability demonstrates the strength of Singapore as a global hub for managing operations.

You have mentioned Australia as a significant emerging market for the group and also for operations given its recent acquisitions. Wood group established itself in 1993 in Australia and with key gas developments off the coast of East Timor and Australia itself, do you see this trend continuing?

Australia is very open in terms of public information and there is no indication that the market will plateau. In fact it will probably continue to accelerate. There are also interesting correlations with the minerals industry, where the same type of project management and engineering skills are required, although this makes the resourcing for oil and gas potentially more difficult.. I see significant potential in Australia, and it is unlikely that its importance will diminish.

Talking more specifically about the acquisitions themselves, with the acquisition of Proteus Global Solutions, RANms and Benchmark Global what has been the added value of these acquisitions?

First and foremost, these companies gave Wood Group a significant engineering capability on the ground in the operational centres in Australia. In addition to the acquisitions mentioned Wood Group also acquired Bond which is a professional services resourcing company based in Melbourne and this adds value to the company’s ability to resource quickly and effectively.

The Group also set up Wood Group Wagners which is a joint-venture with the Australian Wagners company, where the group is the major share-holder, based in Brisbane in order to address the coal seam methane market. This has been very successful since its establishment in March this year.

Gas is of course a growing energy source and there is potential for Australian gas to supply Asian countries. Do you see gas as the key energy resource for Asia-Pacific in the coming years?

Gas is the major growth commodity in Asia Pacific both from a need and a development perspective. The company is aligning its capability, growth and development in accordance with the gas industry. Although the company is aware that it should not focus exclusively on gas, it remains a dominant theme for Asia-Pacific.

In terms of the services offered by the group, engineering and production facilities accounts for 66% of the group’s revenues as a whole. Across the range of activity from engineering and production facilities to gas turbine services which are the main centers of activity for the Asia Pacific region?

Activity in the region is dominated by engineering, management and production services. However, there are a wide range of services offered within this category. Engineering and project management dominates. The group has sector leading capabilities and WoodKenny and its subsea capabilities are without doubt leading the world with a tremendous growth market for this service. Wood Group works closely with its customers to develop resources and intelligence around subsea developments.

Another leading capability is in deepwater development which is growing in Asia Pacific. Mustang Engineering have a leadingedge capability in deepwater engineering.

The group isdiverse, but is very fortunate to have world-leading capabilities. The challenge is to ensure that they are fully integrated into services which Wood Group provides for its customer and this consolidation of services has intensified in the last two years.

One of the key technologies which Wood Group specializes in is enhancing production from Brownfield sites. Given increasing depletion in existing reservoirs, what is the potential for this service in the region?

Wood Group sees great potential. There have been strong successes in Europe and North America in this field. There are assets in Asia-Pacific which have been in production for over forty years in the South China Sea. The Group has some proprietary technology and knowledge, which it can deploy to maximize the value of these assets effectively.

The Group is currently supporting the Brunei Shell Petroluem in Brunei with the region’s largest integrated service contract. The Group employs over 1,200 people in Brunei with its joint-venture partners SKS and Petrokon.

In terms of corporate strategy, the Group has a four-strand strategy in the Asia-Pacific region including balance and differentiated know-how. How can you apply these concepts in the region?

In Asia Pacific, the company interprets the group’s strategy as: ‘step out and step up’. Step out involves broadening the customer base and the services of the Group. Step Up is increasing the intelligence and effectiveness of the group as well as pushing the range of capability to new areas. Coal Seam Methane is a very good example of this. The Group brought international best-in-class experience from a Wood Group company based in Wyoming and migrated this into Brisbane. This new business is already successful with the award of several contracts. It is a strong example of how Asia-Pacific has taken the group’s strategic intent of differentiation and merged the step up step out strategy to apply this to a new sector. This is something that Wood Group is very good at: thinking in a global context but applying intelligence locally.

Another key emerging sector for Wood Group is renewable and clean energy sources. The company recently acquired SgurrEnergy. How do you propose to develop green technologies in the Asia-Pacific region?

Green energy represents one of the Wood Group’s step out targets. The region as a whole has a growing renewable sector and the intention is to be a part of this growth, although the company will be selective in terms of where it engages in this sector. Australia is very interesting in terms of the renewables and carbon capture markets. Wood Group is already participating in conceptual studies with different customers in this regard.

Furthermore, I think this interest in renewables is balanced across the region. The global financial crisis clearly hit the development of green technologies and clean resources. This was unavoidable. However, there is a growing commercial interest in 2010 for green technologies and this will continue to expand in 2011. There is a vibrant debate in Wood Group Asia-Pacific associated with green technologies and renewables.

Mr Choo Chau Beng of Keppel said that wind energy would a high potential future market. As for Wood group there is a new Wave Hub development project and a potential for wind energy. Which are the key green technologies Wood Group hopes to be active in?

Both wave and wind technologies are essential to the Group’s activities. In Australia with Wood Kenny the Group is leading a multi-sector review of these technologies.

One of the recurring issues raised in the engineering industry is human resources. What is Wood Group doing to attract new qualified talent into the industry?

Engineering and resources are a global issue. This is not confined to Asia Pacific. An inherent part of the strategy for Wood Group Asia-Pacific are indigenous development programs. Wood Group takes a particularly active role in universities and academic institutions in order to develop engineering capabilities. This occurs across all its operations from Darwin to Singapore. The group is trying to assist with routes for engineers to enter the industry.

Asia-Pacific is an attractive place for engineering graduates. Science and technology is still viewed as a worthwhile and fulfilling career in Asia. This is clearly the case in Singapore, Malaysia and Indonesia. The role of the company is therefore to ensure that opportunities are given to young people across all its operations. The Group is committed to deploying indigenous workforces.

In terms of having the right people for a project, in engineering and project management context the group operates a workshare programme. The offices in Houston, the UK, Australia and Singapore often collaborate and this is highly efficient in terms of the end result for the customers.

You have been with the company for around three years. What have been your major successes and what is there left to achieve?

In terms of achievement, Wood Group’s footprint is now significant in the region. The main achievement would be the region’s correlation with Wood Group’s overall strategic intent. Asia-Pacific takes the responsibility of being one of the major growth areas very seriously. The company now has well established operations in Brunei and Perth. These hubs are effective, competitive and efficient and they add value for the customer. The growth in capability in a generic sense has been strong and the growth in Australia has been highly significant for the group. Wood Group aims for greater effectiveness across its operations in Perth, Darwin, Brisbane and Melbourne. The Group also aims for deeper penetration into these markets by the end of 2010 and into 2011.

Wood Group is a very good partner and collaborator. I see this as a core competence. As the Group expands, partnerships will be a key component of success. Entering new countries and addressing some of these markets is key for the group. The group is therefore exploring further east in Asia-Pacific and the development of the Group’s India operation with the Mustang subsidiary will also continue.

If we were to return in a few years, where would we find Wood Group Asia-Pacific?

I would like to see Asia-Pacific continue representing the group in the way that its existing class-leading businesses do. I would hope that Wood Group Asia-Pacific can do for the region what Wood Group does in Europe. There is certainly potential for this.

Throughout the divisions in Wood Group there is opportunity for growth and the role of Singapore is therefore to help in this development.

Do you have a final message for the readers of Oil and Gas Financial Journal?

There is a responsibility for all businesses and sectors in Asia Pacific to take the potential for Asia Pacific being one of the World’s main growth engines seriously. There is a very bright business network in Asia-Pacific and this resource needs to be tapped.

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