with Jørgen Traun, VP & Regional Manager – Middle East and India, DNV (Det Norske Veritas)
Mr Traun, could you provide our readers with a brief overview of DNV’s history in the UAE and highlight some of the company’s key milestones and achievements?
We have a strong focus on the Middle East and traditionally our key activity is in the maritime industry. Across the global maritime market, we have observed a slowdown in new construction activities. However, in this region a number of national oil and gas companies, that are also in a sense operators of their own fleet, have quite a different agenda. They do not tend to have the same issues when it comes to financing new products, for instance. This makes the Middle East quite an exciting place to be because the decision makers are considering their long-term strategic goals and are positioning themselves in a very strong way. In today’s environment, they represent some of the few global clients that are very active in building up their fleets.
Considering the recent changes in ownership structures and overall organization of the industry, this increase in activity is not limited to any particular type of vessel but includes a diverse selection of orders. Of course, the ambitious growth plans laid out by countries in the region and their increased focus on enhancing their production is also driving this growth since they want to ensure that they can deliver their products to the world market using their own fleets.
Needless to say, the UAE has laid out some ambitious growth plans to expand its capacity production of oil over the next few years to 3.5 million barrels per day. This provides a wealth of opportunities for those who can assist them in realizing these goals. This allows us to share the knowledge we have accumulated throughout our activities across the world.
Last year DNV worldwide had 3.7% growth on revenues and a 31% rise in operating profit. What was the ME’s contribution to DNV’s positive performance and what is the strategic importance of the UAE to your regional operations?
2012 was certainly a good year for DNV and was perhaps the company’s strongest performance to date. Over the years, DNV has worked towards positioning itself strongly in the oil and gas sector. I believe our presence in the region has not been at the level it should have been but we have been able to address that and are now providing our risk and verification services in a more focused manner. This has contributed strongly towards the positive performance DNV has demonstrated over the recent past.
Looking ahead, the next step for us would be to leverage our enhanced positioning to grow our regional footprint. However this can be difficult since it is not that easy to attract talented personnel to the Middle East and there is a limited amount of highly qualified technical people available here. We must therefore carefully calculate any rapid expansion plans.
In this regard, assuming we are granted approval by the European and other authorities, I believe the potential merger with GL will be very beneficial for us in the region. In many ways, DNV and GL are very complementary and GL has a very strong base in the Middle East. Although the approval has not been finalized just yet, I am very optimistic about the synergies that can result from this union based on the two companies’ track record here.
In relation to the 2010 acquisition of Kema, Mr Madsen, noted that ‘different structures are needed for different purposes’ – in this context, how has DNV responded to the region’s unique culture and business challenges?
I believe that sometimes the differences between the cultures tend to be overstated. I personally do not find the business cultures to be that different. Although there might be some variations in approach, the overall goals being targeted are similar. The technical and commercial solutions are to some extent the same.
Of course if you are a state owned company you are presented with different options. . Hence, in many ways, it is not that difficult to find a lot of similarities between DNV’s home base, Norway and the UAE in the way these countries have built up their national companies and the way they have supported maritime industry.
How exportable are the lessons learnt from the North Sea to the Middle Eastern region?
I have on a number of occasions seen that the UAE likes to look around and see what is available in a global market and see if there is something that can be adapted to a local situation. Having said that, I believe Norwegian based companies have a lot of opportunities here in the UAE based upon their experiences from their home market. This is especially true when you consider that these companies have had to adapt to highly challenging environmental conditions, pushing their limits and learning from that. Hence Norwegian based companies have developed and implemented a range of innovative solutions that are sought after all over the world. Perhaps it is for this reason that a number of Norwegian suppliers, including DNV, have been approached and asked what they can provide.
In terms of DNV’s core services in developing rules and standards for the maritime industry, we were initially looking at the very rough conditions of the North Sea. However, since those conditions are unique to that region, we took a wider view and introduced a set of classification rules that are specially tailored for this region.
Over the past few years, DNV received at least 2 innovation awards and has won a series of classification society awards from Lloyd’s List Middle East. How have these recognitions shaped your local brand image and client base?
DNV has traditionally always been very active in research and development more than most classification societies. The closest competitor we have in this regard is perhaps GL who we are set to merge with soon.
In order to gain a better understanding of this we have to take a look at the history of the different classification societies, how they were established, what kind of commission they were given and what ownership structures they have. With that full picture it becomes easier to understand that with the commission DNV was given, we have an inherent commitment to provide these forward looking solutions for our client to help guide them forward towards a more sustainable business.
Considering the significant investments being made in further developing the UAE’s oil & gas industry, power grids and sources of renewable energy, what growth opportunities have you identified?
The biggest activities for us in the region will continue to be what we call ships and operation. We will observe trade patterns characterized by an increased trade to and from the region, prompting the need for increased survey activity. Nevertheless, regardless of the segment you look at, the rate of development here is very rapid compared to that of other countries.
In addition to this, I believe that the shipyards here are eager to position themselves competitively in the world market. For instance, we recently signed an agreement with the Dubai Dry Docks and Rolls Royce to speed up the implementation of LNG as fuel.
In conclusion, what are your ambitions for DNV’s regional operations? If we were to come back in 3 years’ time, how will DNV have evolved?
Considering our oil and gas activities, I find that in past we have relied excessively on other DNV offices globally. Therefore our ambition at the moment is to build up a strong base in Abu Dhabi to establish more of a local production here. Of course we intend to capitalize on our global network and strength, which is always an asset for us, but it is important that we focus on developing a local production given the highly technical and demanding nature of our activities. Our Class activities in UAE come from a stronger position which we will utilize to further enhance our service delivery to our clients here, so also here we are set on a path to grow.