Dimmie de Milander – Commercial Director, Starlite Aviation, South Africa
Dimmie de Milander, commercial director for Starlite Aviation Group, shares how the company has adapted to the global downturn in the oil and gas industry over the past few year; his positive outlook for E&P activity, particularly in southern Africa; and the local knowledge, ability to work successfully under harsh conditions, and international network, that sets them apart from the competition.
Dimmie, could you share the main highlights and milestones for the company since we met you in 2012?
“South Africans are able to work, execute and deliver successfully under difficult conditions.”
Starlite Aviation Group is a multi-faceted aviation company, offering a range of helicopter services on a global basis for a number of sectors, including emergency relief, offshore oil and gas support, and passenger and cargo transport, as well as a world-renowned pilot training school.
Focusing on the offshore oil and gas sector in particular, when the industry was booming in 2013 and 2014, Starlite performed extremely well, delivering a number of projects very successfully for international oil companies. From 2015, however, as a result of the fall in oil price and the global downswing in activity over the past few years, the company has had to undertake some rapid changes to adjust to market conditions. For the past two years, our offshore involvement has been very small, reflecting the difficult period the global industry was undergoing.
Nevertheless, due to the company’s diversification, while the oil price crisis put us under some stress, we were able to adapt and escape nearly unscathed, particularly compared to some of our competitors that were large helicopters suppliers much more focused on oil and gas, who experienced dire financial difficulties.
At the moment, Starlite does 30 percent of its work in humanitarian and medical support, 30 percent in post-conflict reconstruction and aid distribution, 20 percent on training and 10 percent on oil and gas. This is a good balance for the company at the moment, and naturally, the split also adjusts depending on prevailing market conditions.
With the oil price having broken the USD 60 mark, what is your future outlook for this sector?
Certainly, we are very excited with all the positive changes taking place, particularly in the southern African region, which we consider to be our prime playing field. For instance, Shell (through BG) is already drilling in Tanzania. In Mozambique, we have already positioned ourselves as much as we can without making large financial investments. We are waiting for the ENI-Exxon deal to progress further before moving ahead with establishing a local presence in that country. In Namibia we are already working with PGS, supporting their seismic surveys. Tullow Oil is planning to drill an exploration well before the end of 2018. In Equatorial Guinea as well, we are seeing some positive signals from Ophir Energy.
In South Africa itself, we are waiting expectantly for Total and Canadian National Resources (CNR) together with the recent entrant, Qatar Petroleum, to come along, hopefully before the end of the year.
This is the strongest uptick in activity since 2014 so we are all very optimistic. Add to this the domestic political situation with Cyril Ramaphosa having been elected ANC President and the recent resignation of President Jacob Zuma, there is a surge of enthusiasm and belief in the country. With oil price above USD 60 now, nearly USD 70, the majors are entering South Africa again. We now hold the interest of the likes of ENI, Exxon and Total.
The oil and gas industry is highly cyclical. How has Starlite managed the cycle, specifically in terms of retaining investments and skills during downturns in order to be prepared for the recovery when it arrives?
When the downturn began, as a result of the huge costs associated with the equipment used in this industry, we had to release all leased, offshore aircraft. However, the silver lining is that the downturn affected the bigger, offshore-dedicated players more severely and some went into Chapter 11 bankruptcy. As a result, the leasing companies that own the aircraft now have idle assets and are very keen to supply them again. It is a buyer’s market at that the moment. There is better availability of modern helicopters, which are now also available for shorter terms. This actually puts Starlite in a stronger position than before. We are currently in talks with the leasing companies; while it will still be expensive to build the fleet up again, it is certainly manageable.
What has been critical was retaining our pilots and their expertise over the past two years. While they have not been able to fly offshore in the region, we have kept them flying on other contracts to retain the core expertise. For instance, with the new possible tender from Total coming up, we are able to offer them the same pilots they used on our 2014 contract with them. This continuity is important and well-regarded by the industry.
Another important factor in terms of retaining our expertise and keeping our pilots sharp has been our international presence. Our head office is located in Ireland so over the past few years, we have been putting a number of our pilots through the European aviation regulations. This has helped to maintain their proficiency, particularly in terms of offshore flying.
We also plan to increase the amount of flight simulator training, returning to our annual practice of doing it for pilots once a year, to get our pilots back up to the level of expertise required for offshore flying.
As an aviation company, Starlite really operates in this global village where pilots can fly anywhere as long as they do the relevant local licensing validations. The fact that pilots and the trade itself are so inherently exportable means that as a company, we must also be global in order to compete effectively.
What has been a recent flagship offshore project for Starlite Aviation you would like to highlight?
We successfully executed a project for Repsol at Terrace Bay in the north of Namibia. (multimedia available on our Namibian partner’s website here http://www.bay-air.com/media-centre-videos/) That area is known as the Skeleton Coast and the name refers to the harsh environment and unpleasant working conditions. Many a shipwreck in the area lends credence to the name.
What we did was to establish a helicopter base, essentially an airport, in the desert, in order to support Repsol’s drilling. Despite the lack of existing infrastructure, we did this without any delays or downtime. The only time operations were delayed was as a result of the extreme fog that is a feature of the area.
As you mentioned, the industry is global and there are many large players. How does Starlite Aviation compete effectively?
The Namibian project mentioned above really encapsulates Starlite’s value proposition: our ability to execute and complete difficult projects successfully with no downtime or delays for our clients over very long supply lines – critical in Africa. The local knowledge of physically operating in the harsh conditions of various countries in Africa, in terms of both aircraft and crew, is of paramount importance. Companies face such harsh operating environments here, be it in Namibia, Mozambique or off the south coast of South Africa and they need to be prepared
Furthermore, we have intimate knowledge of local African civil aviation organizations, which is fundamental to the success of any offshore projects. Local civil aviation regulations can be complex to navigate. Our extremely well-developed network of officials and relationships with local civil aviation organizations help our clients navigate the local landscape. This applies both to our African and European operations, where we ensure that we have the local experts and knowledge to conform to African and European rules and regulations.
Starlite Aviation actually started in 1999 as a pilot training school. How do both sides of the business complement each other now?
They are extremely complementary, particularly as the Starlite Aviation Training Academy has had a long tradition of excellence and is highly regarded globally. We are currently training armed forces pilots from a number of African countries. Foreign dignitaries often pay visits to the training school. For instance, in Equatorial Guinea, we have been flying for the President and his family for the past nine years, and due to that successful record, have been approached to train some of the country’s pilots.
Both the training school and the oil and gas division travel around Africa on business trips together, as our clients are often the same. Typically, a Starlite delegation would meet someone in the commerce department who needs to develop the offshore industry and create jobs in the country. From there, we may meet the Mister for Energy as well as senior ranking officers from the armed force, who may need flight training.
Having personally worked in 34 African countries, I find it easy to work with the international range of clients that Starlite has.
From another perspective, the Training Academy also provides us with a pipeline of skilled pilots we are able to tap into for our offshore projects. While we do not guarantee them jobs with us, as we have trained them, we know their standards. If a job opportunity becomes available and we have qualified students from the Academy, we will link the two.
Ultimately, the Academy is another way to bring South African expertise to the world.
How would you like the South African brand to be seen abroad?
South Africans are able to work, execute and deliver successfully under difficult conditions. Faced with challenging, even impossible circumstances, South Africans will make a plan – and carry the job through to the end.
Looking forward, where would you like to see Starlite Aviation in five years?
Five years ago, we were working in Namibia while a similarly-sized helicopter company was working in Morocco and Mauritania. Oil was found in Mauritania, which led to an increased demand for helicopters. Today that company operates a fleet of 15 to 20 ultra-modern helicopters. This is external circumstance. There must be oil and gas discoveries for us to grow. The crux is to position ourselves at the right moment – which is before the boom happens.
Having prepared over the past few years for this, with the increase in activity now, we are hopeful that we will be soon permanently established in Namibia and Mozambique, and the entry of ENI and Total in South Africa will lead to extensive drilling and therefore significant growth opportunities for us.