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Interview

with Qi Meisheng, President & CEO, COSL Drilling Europe

01.06.2009 / Energyboardroom

China, as the world’s second largest energy consumer, is unsurprisingly home to many oil and gas companies. While some in the upstream like CNOOC and Sinopec have aggressively expanded abroad, the same can’t be said for many of the corresponding service companies. How would you describe COSL’s internationalization strategy?

As you know, COSL is the dominant oilfield services provider in China and the only integrated oilfield services company in Asia Pacific. COSL never stops its pace of chasing internationalization which is one of the core development strategies of the company. After years of hard work, COSL has successfully expanded its services to 21 different countries and regions. Meanwhile, COSL always strives to satisfy the demands of its existing and potential customers all over the world. The $2.36 Billion acquisition of Norwegian company Awilco Offshore ASA in October 2008 is just one strategic move towards COSL’s internationalization ambition. Through this acquisition, COSL has become one member of the Norwegian Continental Shelf (NCS) oil services contractors. What’s more, the new oil rig projects- with the average of Awilco Offshore’s rigs less than two years, compared to COSL’s previous ageing rig fleet, has greatly enhanced COSL’s services ability.

You mention the Awilco Offshore acquisition. What was it about Norway that made it an attractive market for COSL to enter?

Norway is a country leading the oil and gas industry in offshore exploration and innovation. I can recall 20 years ago, many Norwegian consultants and engineers came to China to bring their experience and technology. At that time, China learned much from this exchange. Norway’s focus on technical innovation, and the standard of this area of the world, is markedly higher than in many others throughout the world. Hence, COSL decided to open a window here and acquire such knowledge and innovation, enabling the company to follow and grasp the relevant advanced technology and management in Norway.

Chinese companies are perhaps known for being very cost effective, while Norwegian companies are known for operating in one of the world’s highest cost environments. How do you integrate these two philosophies?

This is a good question! When these two companies merged – and they are still in the integration process – the management style and culture were the first to merge on both sides, both coming to the middle. Costs in Norway are higher than other locations, but COSL believes in a mixture of both management styles and management team, to complement some of the cost-saving philosophy from COSL, allowing both sides to find mutual benefit and successfully compete in the market.

How would you define your own personal management style and philosophy?

I subscribe to a very open philosophy, and don’t get involved in every last detail with my management team or interfere with their responsibilities. At the mean time, I encourage mutual understanding on different cultures and working styles and highlight teamwork, “one team, one goal, joint effort”.

Has there been any difficulty in the distance between China and Norway? Norway has many international service companies, primarily from Europe and the Americas – how has COSL been received?

COSL is itself an international service company, doing business in over 20 countries around the world. This fact is supported by the volume of oil companies investing in China, including StatoilHydro, BP, ConocoPhillips, and many others. COSL counts close cooperation with all of these companies in China for the past two decades, and has already provided many services to them in China. Therefore, COSL already knows its clients’ technical service requirements. In Norway, the biggest challenge for COSL is the working environment, but this is a challenge to all the service companies in the country – not just COSL. Norway is a very wealthy country, with high focus on worker’s welfare, and strives to establish the best working environment. The management and staff in COSL Drilling Europe AS, however, are all Norwegians, so we know the standards and requirements.

Norway is a very rich country, but not all the players in Norway share this state of well-being. Some are running out of money and looking to be acquired; others like COSL are filling in the gap. How would you assess COSL’s financial position?

COSL has just released its Q1 2009 results, which have shown that year over year, the company has rapidly and steadily developed its speed of growth. COSL has a very strong financial status, and is well-known to many investors, being listed as a public company in Hong Kong and Shanghai. Even in the midst of a financial crisis, many banks are eager to lend money to COSL, further confirming that the financial status of the company is, and will continue to be, very strong in international markets.

COSL is developing its deepwater expertise in China, although the company will clearly benefit from its presence in Norway, a recognized leader in the field, as well as the knowledge and expertise gained from Awilco Offshore as well. What are some of the main technologies and products developed in Norway that can be exported to other countries and COSL internationally?

Norway is very famous for its development of deepwater technology. COSL has recently finished a project called ASDD (Artificial Seabed Deepwater Drilling), a joint venture with Kristiansand-based Atlantis Deepwater Technology Holding AS representing almost four years of collaboration. In fact, at the very beginning of the project, I was sent here to work on it. Now, COSL is pleased to announce that after the four years, the company has successfully completed a trial well in the South China Sea in March 2009, with plans to roll out the technology more broadly in the Pan-Pacific area. The upshot of the technology is that it helps to get more out of deepwater operations for third and fourth generation rigs which can only reach 400m of water depths – this will help reach water depths of up to 1200m.

So there are already concrete results of Norwegian collaboration and subsequent exportation. Looking toward the future in this regard, what would be your dream project?

That certainly isn’t the only project; there are many more on the way, and COSL is always looking for more opportunities to adopt and develop high technology. Some of the biggest opportunities are in the downstream sector of the oil and gas industry, with a dedicated group that is presently meeting in Oslo focused on an LPG technology conference, managed by CNOOC (China National Offshore Oil Company), COSL’s parent company.

You mentioned before that COSL’s new slogan is “Always Do Better.” What are your ambitions for the company and how will you always do better here in Norway?

First of all, it’s about providing an honest service to our clients to satisfy their demands. Also, we should treat our workers, staff, and employees in a manner that contributes to the most safe and comfortable working environment possible. COSL shall also always do better to care for the environment. Working in offshore, we are responsible for the care of the sea and environment. Hence, the motto “Always Do Better” encourages all the staff and employees to work harder to achieve higher and higher results.

Where do you want to bring COSL in Norway over the next five to 10 year time horizon?

At present, COSL has many modern semi-rigs, which will bring measurable business here in Norway. COSL will also continue with accommodation units, the company’s second business segment, essentially offshore hotels such as those on Port Rigmar and Port Reval of ConocoPhillips that can hold 350 guests offshore. Of course, in addition to building upon these two core businesses, COSL will continue to work harder into developing and acquiring technologies, and perhaps even another service company, to continue and further the high technology suite for our clients.

What is your final message to OGFJ readers all around the world about COSL and always doing better here in Norway?

COSL will always do its business better, in Norway as in all its successful regions around the world.

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