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Interview

with Eckhard Hinrichsen & Mr. Mariano Ureña, GL Noble Denton, Mexico

19.09.2013 / Energyboardroom

Could you give some background on the history of GL Noble Denton?

Historically we started as Germanischer Lloyd (GL) a German company founded in 1867, more than 140 years ago. GL started with the maritime sector and the certification of ships. Then in the 1970s it started to expand into industrial services and platforms certifications. It was in 1996 when the company had its first projects in Mexico with Pemex and since then we have steadily increased our presence in the country. Since 2007 GL, which as mentioned its main activities are certification, verification and consultancy, started to expand very aggressively in the industrial area, mainly oil and gas. As a result they bought company Advantica, which introduced a lot of technology into the company with regards to software and experts. From then on GL started to buy companies – like small inspection companies- and in 2009 they bought Noble Denton, one of the largest marine consultancies. Noble Denton originally started out of the UK, they have been around for about 100 years and their main business used to be focused in warranty surveys. However, in the last few years they expanded and bought other companies. Now the company has an important design capability and covers the full range of marine services – warranty, design, construction and transport. Apart from the mentioned companies the group also acquired two companies that are focused on the renewable sector: Garrad Hassan and Helimax that have extended substantially the services of GL in the renewables sector. All what I just mention is a brief review of what has been the company evolution and its consolidation in the past years since the vision of the owner is to make the GL Group the biggest independent consultancy.

How important are these local operations in Mexico for the company’s global outlook?

They are very important. Our offices in Houston and in Germany are looking very closely at Mexico, especially now because of the deep water developments which are very interesting for us. This is high end consultancy and the type of services that we want to do, since it is very suited for our operations. Therefore there is a lot of attention on Mexico.

Mexico is clearly dominated by Pemex. How does this influence your activity?

If you want to work with Pemex you have to be very agile and adapt all the time, cater to their needs and see what they want. For example, what was true last year might not be this year. So you have to be very flexible. Fortunately, we have a very good and close relationship with Pemex. Their technicians trust us and this is a great plus for us. In Mexico, Pemex is our main client and this sometimes can be problematic, because there can be a lot of up and down. Typically for the first six months of the year Pemex budgets are not approved so the new projects are not coming out. Then, in the last six months of the year you have to work it all off. That sometimes creates a problem with our personnel. Since we have to keep most of our personnel throughout the year and then towards the end of the year we have to increase it to cover the peak. Saying that and although Pemex will always be our main client and focus of our attention, today we are trying to diversify and go more towards the private sector to avoid the before mentioned ups and downs. Today we already work with companies such as Sempra, ECOGAS, ECA, TLA, EDF, Diavaz, Cotemar and others. Outside of Mexico we have provided services for Osinergmin and TGS, an Argentinean company.As said, we are trying to diversify our client base because of the conditions already mentioned. This year we have focused a lot on foreign and private companies. I believe it is meant to be the same for next year.

So this is your new strategy?

Yes, as well as providing the expertise that we have develop here to support other GL subsidiaries around the world. For example, we just had a project in Saudi Arabia where we sent out our Risk Based Inspection (RBI) experts from Mexico to support the project.

Apart of the opportunities that GL sees in the private sector. With Pemex looking to venture into deep water and ultra deep water exploration, what new opportunities does GL Noble Denton see in Mexico? And how are you preparing to tackle them?

Since January of this year when the new regulations for deep water in Mexico came out we have been working very closely with Pemex. The rules are there, and there are very clear deadlines for Pemex on how and when to comply with them and we are working with Pemex to meet them.Furthermore, we already have one concrete project where we are working with our colleagues in Houston; and we are defining the costs of the worse-case scenario, following the CNH regulationsRight now, we are backed by the Houston office for deep water projects but we are creating a group in Mexico with local engineers who will be trained in Houston and will work alongside our engineers from there. But as time goes by, the idea is to become more independent of Houston and create a strong deep water group in Mexico.

What is the timeframe to build up this new Group?

The next year, we have already started to hire and look for local individuals. The next step will be to send them to Houston.

You mentioned these are local engineers. Is it sometimes difficult to get the qualified human resources in this country?

It is a challenge but we have managed. Our goal is to attract the best talent from the best universities.

Deep water is a new thing for Pemex. Do you think that Mexico has a credible regulatory framework and the instruments to implement basic rules and inspection procedures for that kind of projects?

Pemex has got very good personnel. They are very experienced and they know what it is all about and how to drill a well. However, they have to gain more real experience in deepwater. They have got a strong group, which has been through an extensive training program for deep water. What they are missing of course is real experience, but they are getting there and they will be able to master it.

Coming back to business, other companies have said it has been hard for the past five years for their companies. Is this the same for your company?

Maybe not for the past five years, but certainly the past two years. We had very good years until two years ago. For us, 2010 was particularly hard, because we went through a restructuring process, during the time of the global crisis. We actually finished the restructuring process a few months ago and now we are moving forward and getting to work and this year will be the turning point.

This year is going better?

It is going better. We shall have to see how next year goes, although it won’t be easy since there will be presidential elections. However, we have a good backlog for next year. We passed the challenge and today things are moving, we have a very good group of professionals, the best in the local market so we have a lot of possibilities to succeed.

Could you please comment on what projects are you involved in and what are your core activities here?

We basically have three main business streams. The first is verification and certification. We have four verification units of which the biggest one is gas. We also have electric, pressure vessels and environmental verification units. This is a big part of our work. We work closely with the Mexican LNG terminals and we service most of them here in Mexico. So we have the lead in this field in Mexico. We also have certification services. We do certifications of existing installations for Pemex, such as pipelines and plants. We do a lot of work there – mainly in the Villahermosa area and in the south. We have just started a big project for the next two years handling risk analysis. So we will do all the process risk analysis for Pemex in the southern region. What I mention concern the certification and verification part of our business. As for our integrity management services, which is more maintenance related, we have our own software: Galiom. Now no one in the market has a software like that, so it is very unique. We have implemented it successfully in Pemex and we are now trying to get it in with private companies. Even though Galiom was developed in Malaysia, the Mexican operations have performed the most implementations for onshore plants worldwide. Hence with this experience we can offer support to the GL group because we have developed a very strong group for RBI (risk based inspection) here. Indeed we have already supported projects of the GL Group worldwide in Malaysia and Saudi Arabia.

Earlier you mentioned the groups also acquire two companies in the renewable energy sector. What do you have to offer in that niche?

Part of the group is GL Garrad Hassan, which are the market leaders in consultancy for renewable energy, especially onshore and offshore wind energy. They offer a lot of services to do with the certification of turbines and also provide feasibility studies and project management. For example, if you have a project planned, they measure the wind over time at that site and can tell you if the project is feasible or not. From the GL Noble Denton side, we are supporting project developments with personnel and we check the design. In fact, we just checked a project’s foundations. So we verify independently that the foundations of the turbines are calculated correctly and there are no problems with them. We also check the electrical part for compliance with Mexican regulations. During construction we will have people onsite that will check safety, worker safety, quality and progress.

You are difficult to define, how will you define GL Noble Denton?

Yes. We are a third party consultant. That is how we define ourselves. We are not an EPC company, we do not construct or operate, we do consultancy. Our mission is to lower the risks of our clients operations.However, sometimes we do provide basic engineering for certain projects, as well as services for pipelines and power plants.

If we came back in five years what will we find in the company?

You will see a bigger company with more people. We would also like to establish ourselves as a technology partner of Pemex, especially for high end consultancy and deep waters. We want to be a reliable partner for them. We want to go with Pemex when they move in that new direction and bring in the expertise since we are capable of it and have the big advantage of being well embedded in and supported by the GL Group. We have 7,000 engineers worldwide and we have a very large engineering support in the United States, in Houston, in the UK and in Germany. We can bring that here.We would also like to branch out more into the private industry. We want to work with the LNG terminals that Mexico has and be the partner of companies like ECA, TLA and others. On the other hand, one of the advantages that the group has nowadays is shared services. We have employees – from all over the world – come here and support us in providing services for local companies. Or we go over there and provide services for different offices of the group. Switching staff between subsidiaries and different companies within the group; that is the main idea. That is what the company wants.

Mr. Hinrichsen, you have been one of the few foreign Operations Managers we have seen. What advice do you have for foreign COOs coming to Mexico to work in the oil and gas industry?

You have to adapt to the culture. Sometimes you have to be patient, however do not forget your roots. The advice could be try to stick to your beliefs and your principles, but be patient and do it the national way.

Mr. Ureña, you have been here for over two years. What has been the most satisfactory part of your job working for a German company?

My colleagues in Houston and in the UK are very professional and I have had a lot of great experiences with them. This is not the first time I have worked with foreigners but it is the first time I have worked with so many engineers and I have learnt a lot from them. In the other hand, I have seen a lot of interesting things happen with the group – mergers and fusions and acquisitions of so many companies. Getting to know the market has been priceless.

What would you like to be the final message for our readers?

Pemex has to make a special effort to bring up the oil production again and hopefully deep water works out as is planned. Mexico has a lot of future and it will be very interesting to see how things evolve in the coming years since there will be a lot of activity offshore, especially in exploration and GL Noble Denton is ready for it.

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