Ernst Meyer, Vice President & Regional Manager, DNV, Singapore
The Vice President & Regional Manager of DNV in Singapore discusses the company’s enduring presence in Southeast Asia’s maritime and offshore industry, and expands on how companies can operate efficiently and safely in a region where upstream regulation remains relatively undeveloped.
Det Norske Veritas’ (DNV) history goes back well over a century, when the foundation was established in Norway to inspect and evaluate the technical condition of merchant vessels. What are some of the key milestones in the history of DNV Singapore?
DNV has a rooted heritage in the maritime industry since 1864 when it started creating standards for the design, construction and operation of ships in a safe manner. Over time, these activities developed into the classification services we currently offer today which have become institutionalized into the industry since they are required for insurance and port access purposes, among others. Although there are many competitors in the classification business, one in five ships is classified by DNV.
With that backdrop, Singapore of course is a very important market for DNV since the country is a significant maritime hub and a major player in the ship building industry. DNV has had a presence in Singapore for over a century, conducting surveys since 1898. However, it was only some thirty years ago that we officially established our current offices to accommodate the growth of the maritime sector. In fact, the ship yards in Singapore had already began moving into the offshore sector which is largely why the country is so well recognized for its production of a range of mobile units today; from drilling rigs to jackups and floating production, storage and offloading vessels (FPSO’s), and accommodation modules. In this way, I believe that DNV and Singapore share a common maritime heritage, which supported our gradual development into leaders in the offshore industry.
From Singapore, DNV caters to the South East Asian (SEA) region, spanning a total of nine countries, from Vietnam to Australia. Interestingly, among these countries you will find that they all have oil and gas resources, with the exception of Singapore of course. As a result, Singapore has developed into a strong player on the business development side, with numerous companies basing their headquarters here. Singapore has undoubtedly developed a strong set of technical expertise that caters to the needs of international players. Illustrating the relative importance of this industry to the country’s economic performance, the government has made it a national ambition to mold the city-state as a competence based hub in the maritime and offshore industry, among others.
Since the days of easy-access shallow water resources are now behind us, the offshore industry in Asia is growing increasingly more advanced. As a result, this is driving the local competencies in the industry to ever-higher levels as well and this is precisely where Singapore intends to establish itself as a center of knowledge.
What is DNV’s role in shaping Singapore as a maritime and offshore knowledge hub?
DNV delivers advanced services to the offshore oil and gas industry. We help to identify not only the critical safety elements of a rig or vessel, for example, but also the critical business factors and how these assets or systems are performing the tasks they are designed to. Moreover, we verify that equipment is compliant with the safety and environmental standards expected.
Generally speaking, these quality regimes are enforced by local governments across the world. However, to some degree, this is less prevalent in the Southeast Asian region (for example Indonesia, Malaysia, Brunei, Myanmar) since their regulatory frameworks are not as mature as in the western world. These countries are not as accustomed to advanced offshore regimes as more developed offshore markets like in the UK or Norway, for instance.
As a result, international upstream players must implement their own safety systems and standards, to some degree, since they are not administered in the same way as they are in other regions. Again, this is another service that DNV offers to clients in the region as an independent verifier, ensuring that the relevant safety and environmental measures are indeed taken and implemented.
We also offer a wide range of technical and risk analyses services as well as qualifying new technologies. For instance, we can carry out troubleshooting services. This can involve testing the durability of various materials used in blow-off preventers, for example, in our advanced laboratories to determine whether they are fit-for-purpose.
Given the underdeveloped regulatory framework in the region, to what extent do upstream companies go above and beyond the minimum requirements?
Essentially, this boils down to the two-tier regulatory regime. If, for instance, you are based in Norway, then it is certainly more than enough to comply with their standards and regulations. I do not think any company is willing to go above and beyond that since they are some of the most demanding requirements in the world.
On the other hand, in West Africa or South East Asia, the super majors understand that they have to be proactive and take on additional measures. As a result, we find that the big players tend to implement safety and environmental policies that are comparable to those that they are accustomed to across their global operations.
The maritime sector in general has struggled over the recent past, prompting competitors to follow the money trail to the oil and gas sector, for instance, which continues to demonstrate good potential. How does DNV manage the threat of increased competition?
Given our long history working in the oil and gas sector, DNV is very advanced when it comes to the technology and services it offers. We have an intimate knowledge of the industry and are accustomed to working in large volumes since the 1970s on the back of the Norwegian oil and gas development.
Although we do see a number of our competitors trying to acquire their way into the sector, they are still far behind us in terms of experience with the oil and gas industry. That is, although we are experiencing stiffer competition, it is our strategy to compete on the basis of high quality services and leverage our technology that helps to set us apart from the competition.
DNV is known to collaborate with clients and partners to develop new technologies, methodologies and solutions for the industry. What are the ‘hot topics’ DNV is tackling today in the region?
DNV often participates in what we call Joint Industry Projects (JIP’s), which essentially focus on leveraging the industry’s knowledge and resources to solve industrial challenges. In Singapore, we are working closely with the Maritime & Port Authority of Singapore (MPA), as well as twenty other partners, on a JIP to investigate the operational feasibility of LNG bunkering in the country. This is a great example of why JIP are so important for addressing challenging projects since such an initiative will require the support of players from across the entire value chain. By any measure, this is not something that any particular company can address in isolation.
In addition to this, we are working on a couple of other JIP’s with some of the oil majors and equipment venders. These are primarily concerned with creating safer and more reliable offshore operations in demanding environments.
Singapore is indeed prepared to invest considerably in LNG bunkering, what is your assessment of the projects feasibility?
Generally speaking, we see that LNG bunkering is becoming an increasingly important alternative to the conventional fuel source. Not only is heavy fuel oil very polluting, but it is also becoming scarcer. This has the effect of driving the price of the fuel to higher levels, which adds to the business pressure the shipping industry is already facing due to falling freight rates. Furthermore, ship owners will soon be subject to stricter emissions regulations enforced by the International Maritime Organization (IMO).
As a result, LNG as a fuel seems to fit perfectly within this picture assuming it is technologically feasible and readily available. It is both cheaper and cleaner to burn and therefore makes a lot of sense. The role DNV has played within this is to document to regulators and stakeholders that it is safe to implement. We have also already developed ship classification rules for ships running on LNG fuel. In addition to this, we have analyzed the feasibility of LNG bunkering by assessing the technical elements necessary to bring LNG to the Singapore and then getting it into the ships.
In a few words, what would it really take to introduce LNG bunkering to Singapore?
The interesting thing about Singapore is that it is more or less the shipping world’s main ‘gas station’. As such, the country certainly has the infrastructure and scope of services designed to accommodate to the needs of passing vessels. What’s more, Singapore has also very recently inaugurated its first LNG import terminal, making LNG available. That is one of the key elements to the success of LNG bunkering. The other is how to get the fuel to the ships. This will require significant investments in both infrastructure and the ships themselves, which also raises the question of when the ship modifications make sense. At DNV, we have already carried out these analyses to provide the answers to these questions.
Within key technology areas, research and innovation is an important part of DNV’s strategy, of which, upwards of 80 percent of it is conducted in Norway. However, with the opening of two technology centers in Singapore within the last three years, what role will Singapore play in the company’s R&D activities?
As a whole, DNV spends five percent of its global revenues on innovation. The Clean Technology Center and the Deepwater Technology Center, opened in Singapore in 2010 and 2012 respectively, are a result of DNV’s ambition to continue along its growth path and spread its innovation genes instilled in the company towards Asia. Historically, our Asian operations have not played a big role in innovation but this is something we intend to change. As a result, a few years ago, we began to engage and place expectations on our operations in Asia to be more active in innovation.
This corresponds well with Singapore’s national ambition to be a regional competence center for deep-water and clean energy technologies. As such, we have been working closely with the Economic Development Board of Singapore (EDB) in order to realize this shared ambition.
What arguments do you present your headquarters when competing for a share of the innovation funding?
For any affiliate, funding can only be acquired by presenting sound investment proposals and demonstrating a track record in delivering successful results. For Singapore, our first large industry projects were in the topic of LNG and given our positive results they achieved, we are very well positioned to continue along this growth path in terms of innovation in both our clean technology and deep-water technology centers.
Today, our technology centers employ a diverse pool of approximately 60 researchers and it is our intention to double this figure by 2016.
On the topic of growth, what synergies do you expect to realize form the proposed merger with GL Noble Denton as it slowly progresses? How will DNV as a whole evolve?
I expect the merger to have a very positive impact on our operations, as it will provide us with access to new markets as well as new clients, in the Asian region and beyond. On the oil and gas side, we will have a much stronger presence in the Malaysian, Indonesian and Thai markets, for instance. Moreover, the merger will allow us to offer our clients a wider and more comprehensive range of services.
What challenges are you looking forward to as a regional manager following the merger with GL?
It is not every day that your group of colleagues increases by 80 percent at once. We are all eagerly awaiting the clearance of the merger by the authorities and have made many preparations for the event so that once we get the green light we can hit the ground running and start a new chapter in DNV’s history.
In conclusion, what are your ambitions for DNV’s regional operations? If we were to come back in three years’ time, where will you have taken the company?
The maritime sector as a whole has been demonstrating few growth opportunities over the recent past due to a general oversupply and shrinking margins. As such, we intend to at least maintain our current volume levels in the region while enhancing the quality of our services. The optimist in me believes that this presents us with a great opportunity to improve and streamline our maritime services.
By contrast, on the oil and gas side we have identified a number of growth opportunities, which we are capitalizing on. For instance, Australia is showing great promise. Although we were not present there just three years ago, today we are running a US $20 million operation. Therefore, in the same way that we expect to grow in the oil and gas sector, we also expect to grow in the power and renewables sectors as well.
To read more interviews and articles on Singapore, and to download the latest free report on the country, click here.