Amin – Managing Director, DNV GL Malaysia
DNV and GL merged in September 2013 to form the world’s leading ship and offshore classification society, DNV GL. Raza Amin, MD of DNV GL Malaysia discusses the success of the merger and they company’s shift in focus.
2014 has been an eventful year for DNV GL in Malaysia: the official opening of a new office and the company’s 150 +1 celebration— 150 years of existence plus one year as a newly merged company. Can you start by giving us an overview of the main milestones of this year?
The number one milestone achieved this year was the merging of the two companies, DNV and GL. The process was not as simple as putting the two companies together and streamlining their processes, but also required careful consideration of other aspects, such as the different company cultures as well as their corporate structure.
I had been personally involved with four acquisitions during my time in Malaysia, mainly during my time spent at GL when the company went on an acquisitions spree. Often I have found the process to be slow, time-consuming and inefficient. However, the merger between GL and DNV has been remarkably quick and efficient. There was lots of energy and effort to push this merger through with the minimal amount of disruption. This accelerated the physical and logistical changes required. We didn’t just bring one group in and move it into the other company’s space; instead we found common ground that both teams could agree on. An example of this is our new office in central Kuala Lumpur that both groups can now call ‘home.’
Can you give us a brief overview of Malaysia’s importance and contribution to DNV GL Group’s revenue of NOK 15 billion (approximately USD 2.5 billion), a 22 percent growth, in 2013?
Asia is crucial to our strategy within the group. A significant part of our revenue comes from Asia, and both legacy businesses had a significant presence in the market already. What is also exciting for us, as a consultancy, is the fact that Asia is a very capex-driven market, which only comes second to Africa in terms of fixed asset investment.
Malaysia is particularly important within Asia due to its maturity as a market. We do not typically sell at the point of inception, where operators are trying to build and develop the necessary infrastructure. We require a level of maturity in a project where the added value we bring justifies the expense. In Malaysia, there are 320 platforms, 300 wells and over 9,000 km of pipeline; 50 percent of this is either close to or has exceeded its design life. Whereas before, the majority of our projects were from green field sites, we are now increasingly conducting projects in brownfields as well. The shift in focus helps us expand the scope of our activities and in-house expertise as well as decrease our reliance on a single revenue stream.
You mention that Malaysia is a’ mature’ oil and gas market. What changes do you envision to DNV GL as a result of the maturing market?
Malaysia is in a phase of aging assets, and recently operators have acknowledged this fact. With any aging assets, you typically have two options. You can either try to extend the life of the asset or decommission it.
The most desired outcome is to extend the life of the asset, but this is not always possible. Cost effectiveness is important but safety and sustainability always have to come first. This involves a careful assessment of the safety systems on board as well as fundamental asset integrity questions. If it’s not possible to extend the life of an asset then the next step is decommissioning. Here you must assess the cost associated with decommissioning and how that will affect the balance sheet. Often auditors in larger operators have been blasé about the true cost of decommissioning and have not given it the consideration it requires. DNV GL has developed a number of cost models to identify the true impact of decommissioning on a company’s balance sheet. We can bring a techno-economic evaluation to problems and accurately predict the cost associated with decommissioning. We have the technical and economic competency in-house to first work out what is required technically before gauging its economic impact.
This is the second time that you have taken the helm of a “new company” after it merged, after the merger of Noble Denton with GL in 2009. What, in your eyes, is the most important aspect to successfully adapt and implement into your leadership style?
The focus in the short term must be ensuring the seamless transition into an amalgamated company. My focus will then be on developing a strong new culture that represents both legacy companies, but at the same time leaving the two different cultures behind and moving on. Once we have a culture in place, we can use it as a strong base to concentrate on growing and developing the core of the business. This involves providing the best service that we can, maintaining the quality of the service we offer to our clients and then focusing on growing the business.
Our business will always demand growth from Malaysia and it is therefore something we can’t simply ignore. Growth is not going to come from conventional areas. We must look to different frontiers and new areas we can bring into play while not ignoring the vast amount of talent and expertise we already have. We can identify this talent and experience in the market and bring it across to a new service offering. A prime example of this is decommissioning, where we used our knowledge and experience to create effective cost models in the market.
One must be incredibly open-minded about potential opportunities and where the oil and gas landscape is shifting. It’s not possible to sit back on our core services and expect to grow: our clients are demanding different needs in a mature market, and we must adapt or face stagnation.
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