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Interview

with Steen Brødbæk, CEO, Semco Maritime

14.05.2013 / Energyboardroom

In 2011 Semco Maritime developed a new strategy, called ‘First Choice 2015.’ Could you outline what this strategy entails?

The strategy “First Choice 2015” gives the direction and guidelines for Semco Maritime to achieve: to be our customers’ First Choice; to be the First Choice as a workplace for employees; to be the First Choice as a benchmark baseline on execution.

We operate according to a clear, shared vision/mission: “to be the energy sector’s first choice for safe solutions that consistently exceed expectations.” The foundation of our strategy is based on our four values: commitment, responsiveness, reliability, inspiration.

Our Dedicated People are preparing to get a deeper understanding of energy industry dynamics, strategic thinking and innovation enabling them to continue Exceeding Expectations in projects, solutions and competences for the energy sector.

Dedicated People and Exceeding Expectations are key. Semco Maritime employs around 2000 people and do not have products as such. Our products is ourselves, and our own ability to come up with new solutions and persuade customers that we are doing the right thing, deliver good quality and on time.

In order to do that, we need to be dedicated to it, and we need to exceed expectations in an increasingly competitive world. We need to do something new every time we do a job.

The energy sector is our prime focus. We have divided that market in four areas. The first is the traditional oil & gas market. From our own base in Esbjerg we can make small platforms of up to 2000 tons; we make service; we have fabrication facilities; we do renovation or repair; and high-level engineering.

In offshore wind we have a two-pillar strategy: one is facilitating everything on the supply chain for construction, design, and new installations on service ships for instance for wind turbine installation.

Then together with Bladt Industries in Aalborg we work on the transformer platforms for wind turbines. Currently we are building one for the German sector; one for the Belgian sector; and we just delivered one for the Danish sector.

Furthermore we focus on rigs, on which we execute design, repair, and technical upgrades or rebuilding accommodation. Traditionally in the 70s, four crew members would share one shower and one toilet. In the 1990s this was changed to one shower and toilet for two crew members; today we are rebuilding to one toilet and one shower for each crew member. The world is moving forward!

Furthermore, we have a strong foot in energy infrastructure, mainly in building power plants. Currently we are finalizing a project in the Maldives, we are closing one in Tanzania, and are in the TOC-process of a project in El Salvador. These power plants range from 10-80 Megawatt.

We have a division to support those four areas, Products & Technology. We are delivering fire -fighting, telecommunication, hydraulic systems, produced water solutions, and chemical systems, and are right now executing a major project to one of the leading oil companies in the world, ConocoPhillips, in Norway.

We have our headquarters and four facilities in Esbjerg; we have offices in Norway, in Aberdeen, Dubai, Singapore, Vietnam, in Guatemala and El Salvador, and in Houston, US.

The project falls under a five-year frame agreement, for development of all systems within telecommunication for the Ekofisk-field. This is by far the largest and most promising agreement within the telecommunication area for us.

Geographically speaking, where is Semco Maritime focusing?

Looking at our strategic focus areas, the North Sea is very important to Semco Maritime. Most of the focus up to 2015 is in the North Sea. A smaller focus is South East Asia from our Singapore office and from Vietnam.

Another minor focus is on the Middle East and US, while a major focus will be on Latin America, and last but not least selected countries in Africa for our power infrastructure.

From an engineering perspective and based on the company’s track record, what do you see as the key projects you are targeting for Semco Maritime to be involved in?

We are using our key competences and focus on smaller EPCI contracts with minor installations, upgrades, or minor modification projects in all three sectors: Denmark, the UK, and Norway. We are not going for 10000 ton modules; they will go to Asia with big contractors like Technip or Petrofac.

Especially with the high focus Semco Maritime has on electrical instrumentation control in telecommunication, we are coming with a slightly different angle compared to the traditional big players in the sector, which are more focused on the structure side.

Esbjerg has a unique profile as a major oil & gas hub and an epicenter for offshore wind, and many local companies are betting firmly on this market. What does offshore wind represent for Semco Maritime?

The offshore wind sector has risen to prominence over the past decade, and they have been able to utilize competences from the offshore oil & gas industry.

The first offshore wind park was constructed by a company that had experience building these parks onshore. They ran into serious trouble dealing with the harsh environment and weather conditions. Now they are using competences from the oil & gas industry and leaning heavily on the oil & gas industry’s supply chain.

We will continue to focus on growing our business in offshore wind parks, which is in Germany, the UK, and Denmark.

What will then be the significance of the oil & gas industry for Semco Maritime moving forward?

The International Energy Agency put forward a prognosis in 2009/10 estimating that energy consumption would grow around 30-40 percent up to 2030. The 2009 United Nations Climate Change Conference took place in Denmark, and the accord that came out of the conference recognised climate change as one of the greatest challenges of the present day and that action should be taken to keep any temperature increases to below 2 °C. How can we combine reducing CO2 emissions with the economic growth of massive countries like Brazil, India, Nigeria, etc?

Different kinds of energy sources are needed for that. The energy mix in 2006 consisted of several categories: oil, gas, coal, and ‘others.’ Under ‘others’ were grouped nuclear, hydro, biomass, wind and solar.

Although around 2009, many politicians around the world very firmly stated that, going forward, the share of renewables as part of the energy mix should increase rapidly, the share of these sources of energy in the world energy mix today is still very modest.

On top of that, nuclear has lost much of its appeal as an alternative following the Fukushima disaster, a fact clearly underlined by Germany’s decision to ban nuclear from its energy mix. This has to be substituted by something else in order to stay under the 2 degrees target. Hydro and biomass would require massive investments to develop. The North Sea countries are investing heavily in wind, but it is still not very significant on the total world energy mix. This means that we need to explore all opportunities to get Oil & Gas out of the existing or new fields also in the North Sea.

In order to explore those opportunities, more wells need to be drilled, more exploration will happen. In both the UK and Norway we already see that exploration is increasing, and that means a business opportunity for us.

Based on that, and this goes back to Semco Maritime’s business in rig upgrades, we foresee that there are still very significant opportunities for the oil & gas industry in the North Sea.

This is especially interesting indeed because until the late 1990s, the entire industry expected that it would be the decommissioning market that would boom. Indeed this has grown into a sizable market, but there is still a massive amount of work to do in new installments and upgrades of existing platforms.

Of course we have to design sensible and design and construct in a sensible way so that the installations can be removed in due time, but as we can see also from Danish oil & gas companies, there is much more profit in continued exploration more than in decommissioning existing infrastructure.

How far is Semco Maritime from realizing its ambition of becoming the preferred supplier to rig operators in the entire North Sea area?

We have a long way to go. But we are the only player in our field that can offer three locations in the North Sea. We are competing with companies that are focused either on Denmark, the UK, or Norway. We are actually giving our customers the opportunity to choose in which sector of the North Sea the job should be done, and we will push this even further moving forward.

For instance, we made a significant investment in new rig repair facilities in Esbjerg, measuring 10000m2. This is part of the triangle that we are developing. Since opening the new facilities in 2011 we have worked with rigs from Maersk, Ensco, Transocean, and Noble.

What does your internationalization strategy look like beyond the North Sea?

The breakdown today is 70 percent of business is conducted in the North Sea, and 30 percent outside of the North Sea. While we are looking to establish an even stronger footprint in the North Sea for our oil & gas and rig activity, we also focus on other parts of the world.

For instance, Semco Maritime is expanding its activities in Vietnam for instance. In 2012 we signed a new important co-operation agreement with PetroVietnam Marine Shipyard and PVD Tech, members of the PetroVietnam Group.

The agreement was a very important breakthrough for us. The market for rig projects in Southeast Asia has been a strategic focus area during the past 3 to 4 years where we have established our own production facilities in Vietnam. Now we bring all our competences and experience from international rig projects into play on the market

How challenging is it for Semco Maritime to attract the human resources needed to fuel the projected revenue growth?

From 2010-11 we grew 36 percent, and from 2011-12 40 percent. Last year, we hired about 500 employees in Denmark alone. We do not expect to hire as many this year, but we are comfortable that, by growing our competences in Norway, the UK, Singapore and Denmark we will be able to hire enough new people.

We have a great story to tell, and we have opened an engineering center in Singapore that is supporting us. We acquired a company in Aberdeen, and based on that we can also attract people to our Aberdeen office.

What is your final message on the Esbjerg’s ability to build up its international position as a global energy centre towards the future?

It is extremely important for the Danish government to realize that the country is a net exporter of oil & gas and that the oil & gas industry generates around 30 billion in tax revenues, but also that the extraction rate stands at a mere 27 percent for the current fields while the world is screaming for more energy.

As I explained before, we cannot produce enough energy to substitute the growth rate for countries outside of the OECD. Therefore Denmark has to continue exploring as the UK and Norway are doing. We need the government to support that strategy. If they do not, the outcome is easy to predict. This is an international business and international oil companies are putting their money where they can get most back.

I sincerely hope that Danish government understands this and takes the growth potential in the wind sector, in the rate where we from a Danish industry perspective, can accommodate the scenarios. One of the interesting themes in Europe currently revolves around the question of who will pay for the costs that the transition to renewables brings. Will we put these costs on the industry? That would severely affect our international competitiveness.

Will European citizens accept electricity prices that are 200-300 percent higher because it comes from wind or solar power rather than gas and coal? We have to make this transition by making people understand that they all have to pay for it, but we also need production in Europe, at least if we prefer not to turn into one enormous open air museum for tourists from Brazil, the U.S., and Asia.

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