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Interview

with Peter W, Director, Blumbach, Amsbach Group of Companies

21.06.2010 / Energyboardroom

Amsbach was created in 1973 and grew into a company with affiliates and a presence throughout the South East Asian region. Starting as a company supporting oil exploration in the Far East, Amsbach quickly expanded its offshore and project support worldwide. What has been your growth strategy over the years leading Amsbach to what it is today?

Amsbach’s main clients are the Oil & Gas companies and their contractors. The business started by providing maritime and logistic services to these clients. The company’s first project was with Total for oil production in Balikpapan, Indonesia, which is still ongoing today. In this project, Amsbach supported a French company that carried out the installation of the pipelines by providing accommodation vessels, tugs & barges and purchasing services from Singapore to name a few. At that time, most oil companies regional headquarters were located in Singapore whilst operating in Indonesia. It was only at a later stage that Indonesia demanded that these companies establish their local headquarters in Indonesia. With this change, Amsbach also moved into Indonesia to further develop the business within the country. Therefore Amsbach’s growth strategy was to expand with the regional growth.

Today, you are still headquartered in Singapore but you have divisions in Indonesia, Malaysia and Papua New Guinea. Why did you decide to stay in Singapore?

Today Singapore is a maritime hub, with a large group of shipowners and supporting industries such as the shipyards, surveyors, brokers, insurance companies etc. This was not the landscape when Amsbach was first established, and competition was not as fierce as it is today. In the meantime, Singapore has become a large maritime hub with many international players. Amsbach’s business has grown by covering a much wider segment of the industry. The company continues to work within its niche of specialized services and vessels in Singapore because of the convenience of the infrastructure and supporting services here. In doing so, the company has had to look for partners and associates in the South East Asian region because of the change in regulations over the past thirty years.

What would you say is your main niche, what is the importance of each division within the company and how do you see them evolve?

There is a relationship between the different activities Amsbach focuses on. Even though the company is a shipowner, in order to meet our clients’ needs, we have to provide integrated and turnkey solutions as well. It may, for example, be required to purchase parts and equipment, load a vessel, deliver the cargo and take care of the complete documentation. A large variety of activities exists within the business, with some belonging more to the logistics side whilst others are more focused on the chartering business. Our main niche is to provide specialized services for the various sectors of the offshore Oil & Gas business.

Obviously you support offshore projects. Since the problems in the Gulf of Mexico, there are some concerns of companies refocusing their activities on onshore again. With Asia being a booming market for the offshore industry, how do you see Amsbach’s growth opportunities evolving within the South East Asian region?

There are many oilfields in South East Asia being discovered on an annual basis, both onshore and offshore. The catastrophe in the Gulf of Mexico, is a good illustration of the problems that can occur, but it is unlikely that the balance between on- and offshore drilling will change because of this. Amsbach’s ambition is to be a professional supporter of both the on- and offshore Oil & Gas companies and their subcontractors.
To give an example, in its early years, Amsbach supported Mobil Oil in Sumatra, Indonesia for an offshore drilling project where a large gas field was found. An LNG plant was established, and Amsbach provided the logistics services to bring the equipment and materials to North Sumatra. Later, Mobil Oil experienced a blow-out similar to what recently happened with the Deepwater Horizon platform. Red Adair, a famous fire-fighter in the industry, was called on site and had to mobilize his specialized equipment to the field in order to extinguish the blow-out. Amsbach successfully provided the logistical support for this operation. Such business is ongoing, and can happen at any given point in time at any location. If there is trouble with an oil well, a good logistics provider is a necessity.
Amsbach sees growth opportunities in the region where we are able to provide professional, specialized and bespoke services to clients in a timely manner.

Being a good logistics provider also depends on the available infrastructure in the area. How is Amsbach working together with the communities in order to enhance the local infrastructure to better serve operations and the local community?

As much as possible, Amsbach works together with local communities to use available resources in order to obtain manpower and equipment to get involved in logistics operations.
On many occasions, local roads, bridges and landing points had to be improved in order to allow for the transportation of heavy equipment, for example. Amsbach supported these projects by delivering the appropriate materials and equipment to the site.

As you have mentioned before, the competitive framework in Singapore has changed over time, with a drastic increase in the amount of players in the industry. After more than 30 years of activity, how did you manage to stay in the business and remain competitive?

A good track record is crucial in this industry. Customers who are satisfied with a service will be more likely to work with the same partners again. Amsbach always aims to create long-term and mutually beneficial partnerships with clients in order to give us a chance to secure repeat business. However, it is important not only to foster good client relationships but also to remain price-competitive and up to date with market needs.

Singapore has the ambition to become an LNG hub while many deepwater fields are currently also being developed in Asia. Where do you see most opportunities for Amsbach in the future?

An important market is Indonesia; which is a large supplier of LNG to Singapore. However, as a nett importer of oil, Indonesia’s aim is to increase the country’s production – both for internal consumption and for export.
Another key area that is being developed is Papua New Guinea, where Amsbach has been present for the past five years. A very large LNG plant is currently being built there by ExxonMobil, showing the country’s potential to be a very large market in the future. Amsbach plans to stay in South East Asia and maintain its efficiency as a lean but flexible company.

Can you introduce the main differences and synergies between the several markets you operate in?

Some markets such as Indonesia are very mature markets, with production records going back to the 1970s. In comparison, Vietnam has only developed their Oil & Gas markets over the past 10 years. They have been quick to develop their production knowhow and ordered equipment and rigs to build their own industry. It is a good example of the steep learning curve that some countries have undergone in South East Asia. The expertise these markets now have, reflect the growth potential for the oil and gas industry.
We see several synergies in the industry, including national oil companies joint-venturing on oil and gas developments within, and outside the region.

How does Amsbach manage to adapt its operations to the different countries it is going to?

Adaptability is achieved through a combination of factors, including engaging local know-how, participating in joint-ventures and developing our own internal expertise of the markets we operate in.
Having seen the different stages of development, Amsbach is often able to propose solutions for offshore logistics work, customized to the areas in which our clients operate. Amsbach tries to be reliable and efficient, which can stave off many problems, and help operations to run more cost-effectively in the long run. It is important to Amsbach’s clients that the vessel arrives on time, and that there are no major breakdowns because any downtime on a rig is very costly.

Being on time and on budget is crucial in the industry, how do you manage to do so in practice?

It is very important to have a good team with dedicated project managers, and a clear consciousness of what needs to be achieved. Teamwork, professionalism and good communication with the client all contribute to achieving the company’s targets and meeting the client’s expectations.

You mentioned your first contract with Total, a major player worldwide. How did you convince such major players of Amsbach’s reliability?

Since Amsbach is still working for Total today, it shows the importance of a good track record. However, Amsbach has also lost business to an increasing amount of competitors who mainly compete on cost. Very often, customers come back to Amsbach because they do not find the same efficiency and reliability from other companies. An example of the company’s performance is the crew boat service it has run for Total, where over the past five years, there has never been a breakdown or a major incident.

What would be your dream project to work on in the coming years?

Ideally, Amsbach would like to find longer term contracts which are bankable. A lot of contracts which are being negotiated by the lawyers of the oil companies are very difficult to present to the banks. A contract of three years may for example, have a termination clause of 30 days, making it very difficult to acquire financing from a bank. It should also be in the interest of oil companies to give contracts with good conditions so that they can engage reliable operators with suitable equipment.

Talking about finance, how has Amsbach taken advantage of the different financing opportunities that Singapore and its government offers?

Amsbach has in fact not taken advantage of this at all, and although the company has worked with some banks in the past, we use very little financing. One of the reasons, is the type of contracts the company works with. Secondly, it can be very risky in this industry to be over financed because of the fluctuations in contract prices and ship value. The company would rather remain a medium-sized player instead of becoming a company that orders a large quantity of specialized vessels which might not be deployed once they have been delivered.

When Oil and Gas Financial Journal met with Nam Cheong in Malaysia, the executive chairman described himself as an old Chinese businessman in his way of running company, being very careful on how to finance his company. How is your management style influenced by your German origins?

Amsbach is a very prudent company that does not jump on the band wagon too quickly and tries to carefully manage its risk exposure. This has obviously paid off with the company having successfully operated for over 35 years.

How do you see your growth in the coming years, where do you see this geographically and how will it take place in terms of joint-ventures, partnerships, portfolio expansion and so on?

Amsbach will probably engage in more joint-ventures in the future because of the increase in important local players. We see Indonesia as an important growth market in which we would like to increase our participation.

What are the specific niches you want to develop into?

Specialized services has become more important in our industry; Amsbach for example supplies tankers and their mooring systems, as well as supporting vessels. Rather than a simple chartering service, Amsbach provides a turnkey solution for the client. We look to do more of this holistic business.

While 2009 was a rather tough year for everyone in the industry, we see a delayed impact of the downturn on logistics operators and project-related players in the industry. Conditions for 2010 generally look more positive. How will 2010 be for Amsbach?

Amsbach is quite optimistic about 2010 as its specialized offshore sector has not been badly affected, unlike the container and tanker segments for example. There has been a constant demand for specialized vessels, for instance for the many platforms that need to be maintained. The oil business is an ongoing market with its ups and downs, but the niche market stayed relatively stable while conditions are expected to get better.

How do you convince your clients that a company based in Singapore can accommodate customer needs in Malaysia, Indonesia and so on?

Amsbach has affiliated companies in Indonesia, Malaysia and Papua New Guinea with a strong cooperation within our network, which is to our customer’s advantage as we are dealing in mobile assets Singapore remains a keystone for the companies and enjoys a good reputation for business, which is able to support the rest of the group.

One crucial aspect when operating in Singapore and the region is to be integrated in the Asian culture where networking is extremely important. How did you manage to establish Amsbach’s reputation and network when you started here and how do you expand it on a daily basis?

In the beginning, close cooperation with local shipyards and shipowners was very important. Some of Amsbach’s early partners became very successful. The company tries to retain a good relationship with its former partners, as well as to continue to expand its client base.

You are part of the advisory board for the Singapore Maritime Foundation (SMF)), showing your involvement in the community in Singapore. What have been the main developments that you have seen in the industry over the past years?

The main development has been the attraction of a fleet of shipping and maritime-related services to Singapore and the region. We have seen a huge increase both in the number of international players moving here, as well as the development of successful local companies.

Singapore companies generally still have problems to be entrepreneurial in moving out of their own market. What are the success factors for a Singapore-based company to expand in the region?

This was the case some fifteen years ago; the way of thinking has changed dramatically in the meantime. Singaporeans have become very entrepreneurial, which has resulted in a number of Singapore companies growing into global players.

Another challenge in the industry as a whole is human resources, with a big gap between the different generations. How does Amsbach see the situation and how does the company manage to attract and retain people?

With an increase of high quality people entering the labour markets in the region, Amsbach aims to hire qualified and motivated people. There have been programs in Singapore to attract university graduates into the shipping business. This has been a very successful drive and countered the perception that shipping was becoming a sunset industry. Indonesia in particular has made a huge leap forward with good people coming into the labor market.

You mentioned the shipping industry used to be seen as a sunset industry. This is not the case anymore and 2010 even seems to be a good year. What are your ambitions and expectations for Amsbach in 2015?

Amsbach would like to be a larger shipowner with modern vessels which can be operated smoothly in a cost-efficient manner.

Do you feel more as a true Singapore business or do you still have some international heritage?

Singapore has been a success story and Amsbach is proud to be present here. Nevertheless, we feel like an international company as we work with a diverse range of employees and clients; the maritime industry is an international one.

If you were to send out one last message on behalf of Amsbach to our readers worldwide, what would it be?

Because of Singapore, and the region being such a strong growth area with a multitude of opportunities, we would encourage people to explore the potential existing here and try and build their success stories in this region.

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