with Jan Morten Erstaas, CEO, Safetec
Last year ABS Group acquired Safetec. What will this mean for strengthening ABS’ presence in the Nordic region?
Jan Morten Erstaas (JMS): Firstly, it is important to distinguish ABS Group, a consultancy company, from ABS as a classification society. Safetec was acquired by ABS Group. Our two companies are engaged in complementary services to the classification business which is carried out by ABS, the Bureau. We work with both ABS’ clients and companies which do not use ABS.
The logic behind the merger with ABS Group was to bring together two entities with complementary areas of expertise and competence in the risk consultancy business. ABS Group’s ambition in the acquisition was not simply to gain access to the North Sea region, but rather to gain our harsh environment experience.
Safetec has been providing technical, safety and risk consultancy services in Norway for 28 years. We have developed ourselves on the NCS and have been a part of its HSE development. Norway is often viewed as a leader in HSE regulations globally. The Norwegian authorities have a focus on the organizational handling of risk, and Safetec is modeling these organizational models. This knowledge is an export article for our company to international markets. By integrating Safetec within the ABS Group, ABS Group brought the knowledge of these HSE standards into its international operations.
Naturally, ABS Group also gained our international clients. This is a global initiative, and I serve as the CEO of Safetec as well as the Vice-President of offshore oil & gas for ABS Group.
From Safetec’s perspective, ABS Group has a large international presence and this allows us to bring back knowledge gained in other regions into the Norwegian market. ABS Group has been engaged in mature areas outside Norway for decades and can bring its expertise from areas like the Gulf of Mexico to our work here. We also have many projects in Brazil with Petrobras, one of which is assessing the lifecycle of FPSOs. This builds our capacity in integrity and structural analysis relating to lifetime extension and modification, which is becoming an increasingly important area as Norwegian assets head towards their mature phase.
How does ABS as a classification society see its role in Norway?
Egil C. Legland (EL): ABS is providing classification services, which remain entirely separate from the consulting business. Just as ABS Group brings international experience to Safetec, as a classification bureau we can offer our clients in Norway the experience we have acquired from our global operations. Our experience in the Gulf of Mexico since the mid-1950s now heavily informs our work on extending the lifecycle of units in the North Sea, and we have already been involved in several life extension projects in Norway.
Globally, ABS was the first classification company involved in offshore oil and gas, and historically we have been an important driver of this market. ABS has offshore technology centers around the world in places like Newfoundland, Rio de Janeiro, Korea, China and Singapore. Our recent move into Stavanger represents a major step for the company, and we may look to establish a technology centre in Norway.
This is the home market of Norwegian classification company, DNV, how do you differentiate yourselves in this market?
EL: ABS now carries the same level of authority in this market as DNV. We are recognized by the Norwegian flag, allowing us to perform surveys on Norwegian-flagged offshore units. In gaining recognition, our rules were heavily scrutinized by the Norwegian government, our competitors and our clients to determine whether our rules met Norwegian regulations. They were shown to be more than adequate. We gain an advantage by leveraging our global market share and experience.
You mention that the two businesses are separate but complementary. How do you see the relationship among ABS, ABS Group and Safetec?
EL: There is no integration of the class business with the consultancy business. Our business is purely classification and maintaining vessels in accordance with coastal state, flag state and ABS rules and regulations. They are complementary in that when our clients are seeking safety and risk consultancy, they can approach ABS Group as an organization that is well versed in our standards. There is no conflict of interest nor are there occasions where we are approving our own systems.
Many Norwegian companies are bought out by larger American companies. This frequently creates disruption as business cultures clash. What is the risk of disruption through this acquisition?
JMS: ABS Group has made a number of acquisitions over the last year and is growing rapidly – adding more than 700 people to the company during the last year. Safetec contributed 400 to this number. ABS Group also has a presence in 35 countries, with more than 50 percent of its revenue coming from international markets. Therefore ABS Group cannot operate as a solely American company with a uniquely American business culture. It is an international organization.
On 5 January we started the merger process and operated with the mindset of business as usual. We have not physically integrated with ABS Group, and the management of Safetec has been fully maintained. Safetec is an ABS Group company, but we have maintained our brand name and recognition in the market. We are simply looking at how the two companies can benefit from each other’s experiences and methodologies. We are concentrating on how to share knowledge. This collaboration is actually driven by our clients and by the projects in which we are involved rather than by an integration plan.
The Norwegian oil & gas industry is now heading north and into the Arctic, with all the risks that this involves. How do you see the role of your two businesses in this direction?
JMS: The regime of safety created by the PSA is very strict, and this is a challenging market for operators that carry a lot of responsibility. Our focus as consultants is not on handling major incidents but on avoiding them. We have focused our attention on prevention, examining the technical and organizational challenges of this transition to the North to see where we could contribute to accident prevention.
Most of the operators we deal with have a clear understanding of the challenges faced in this region. Operating in more challenging environmental conditions with the cold, the ice and the darkness is something that is well recognized. The preparations for E&P in this region are more intense, and Safetec wants to be a part of the process of making it easier.
EL: From the class side, we will be part of the classification of Norwegian units going forward. The Bureau assesses the integrity of the unit itself, whether it will be producing or drilling. We aim to assist the Operator as to the safety of the unit and we are applying our international expertise to do so. Our Newfoundland technology centre is examining ice management, and our Singapore centre is looking at ice loads. We are well positioned to support this direction in the industry.
What would be your final message?
JMS: At Safetec, we had been looking to be part of a larger company, able to take our North Sea expertise into international markets, and the acquisition provided this