Hari Vamadevan, Regional Manager UK and Sub-Sahara Oil & Gas, DNV GL, UK
Hari Vamadevan, Regional Manager UK and Sub-Sahara Oil & Gas at DNV GL, discusses the merger between DNV and GL, the UK’s strategic importance in DNV GL’s operations, and the company’s white paper on enhancing offshore safety and environmental performance.
In December 2012, an agreement was signed to merge DNV and GL. What was the idea behind this merger, and what does this bring to your international standing?
In terms of our international standing, we almost triple in size. The new company, formally called DNV GL Group, will include 16,000 employees across 300 sites in more than 100 countries. For oil and gas, we will not only strengthen our presence in mature basins such as the North Sea, but in new frontiers as well. These frontiers are growing fast and require resources that we can now offer.
DNV and GL were in fact quite complementary in terms of growth strategy. Since 2007, GL has embarked on a transformation of its business by growing through acquisitions. Each acquisition was chosen either to build additional capabilities or to enhance GL’s ability to deliver its services on a consistent basis globally. This has given GL strength in the marine and onshore pipelines and gas environment. DNV on the other hand has a strong reputation in the offshore environment. Combining GL and DNV has thus given the Group a huge range of capabilities across the entire value chain for oil and gas.
How does the integration process play out here in the UK?
You can never integrate fast enough! In the coming months, DNV GL will accelerate the integration processes to ensure consistent and continuous service operations, avoiding any business interruption for customers. However, it will take a couple of years before we will see the full benefits of the integration.
Almost straight after the closing of the agreement on September 12th, 2013, I was made responsible for all the UK business units. The UK is a really exciting zone because we have grown from 300 people at DNV to almost 800 employees at DNV GL. If you add in over 200 contractors, this means we have access to 1,000 specialists in the UK. Frankly, this is a game changer in the industry because GL and DNV were both successful, but our coming together positions us as a leading provider of technical assurance and risk management services to the oil & gas industry.
What is the strategic importance of the UK within the global organization?
For DNV GL, the UK is almost the number one region for the worldwide organization. The top spot changes depending on what matrix we use, but our global CEO recently mentioned the UK as the number one region as a whole.
Although the North Sea is a mature region, the degree of competence, experience, and knowledge present here is very significant. As a result, we are a major player on international projects and are active in Brazil, Australia, and Africa. That being said, the UK is very much a resource center. DNV GL sees itself very much as an international player, with the UK as a base to export our resources and knowledge.
Twenty-five years have elapsed since the Piper Alpha disaster. However, serious offshore accidents continue to occur globally. DNV has compiled a report, ‘Enhancing offshore safety and environmental performance’, which aims to offer guidance to build a safer working environment. What are the challenges facing the industry?
First and foremost, you cannot be complacent when it comes to safety. DNV GL is now branding itself looking at the safer, smarter, and cleaner elements within the industry. The DNV GL growth strategy is centered on safeguarding life, property, and the environment. It is in our DNA, and is what we are known for: ensuring all oil and gas reserves are developed safely and responsibly.
The reality is that we do learn from accidents, and we translate the lessons learned to the industry. Since the tragic Deepwater Horizon accident, offshore safety has been high on the European Union`s agenda. After intensive negotiations lasting more than a year, the EU published new legislation on the safety of offshore oil and gas operations in summer 2013. DNV had previously been selected to join the secretariat for that review, and I joined European regulators to see how the new regulations were being shaped. It is actually very important for us to have a voice in these discussions because we think of ourselves as a leader in the area of offshore safety. This is also why we published the white paper: to enhance offshore safety and environmental performance.
This paper is not about reinventing the wheel but about bringing the industry together and reminding them that every single time we need to do everything well. For us, the first area is looking at regulation: performance and risk based regulation to complement prescriptive regulation. In Deepwater Horizon report, the US has a much more prescriptive approach, whereas the North Sea has a more performance/risk base approach, and Norway has a balance of both.
The review conducted by the European Union examined these issues globally and concluded that you need a balanced approach, with risk based performance backed up by some specific prescriptive regulations. In addition, the EU acknowledged that there is a significant place for independent verification similar to that done in the UKCS since Piper Alpha.
How are these reports received by the industry?
The industry looks to DNV GL to set the agenda on safety. Thus, the overall review included not just regulations but also topics such as good governance and oversight.
One area we highlighted was recognizing the clear roles and responsibilities of all the different players in regards to oil and gas development. Contrary to the environment of the 1970s, we see a multitude of companies active on the UKCS today. It is essential to understand the overall offshore picture.
The next area is taking a holistic approach to risk, and making sure that these reports are used during the continuous lifecycle of that asset. Companies must keep safety real for operations. By the time assets have been running for 10 or 20 years, the risk documents have changed.
Another area we firmly believe in is sharing data and making sure the lessons learned are disseminated widely. I believe recent events have shown that the industry is moving towards actually sharing the lessons learned, which is quite brave. However, we need more of this sharing.
The UKCS is preparing itself for the decommissioning era. However, no one seems to know when this era will take off. As the expert, what is the status of the infrastructure?
Decommissioning has been talked about for a very long time indeed. Provided the oil price remains stable, around USD 100, you have an engine to extentd field life. Therefore, most of our work today is about extending field life safely and responsibly.
The current discussion is about extending the life cycle of more than 300 existing platforms and infrastructures. At the moment, we see technology playing a big part in that extension of field life. Providing this continues, you always push back decommissioning.
However, plants will be decommissioned in the near future, which will require a good dialogue with the industry. Decommissioning is out there, and the UK government has done a good job introducing tax breaks so that operators can start planning.
DNV GL Group will continue to strengthen its focus on R&D and innovation. What does this imply?
As a matter of fact, we invest five percent of our turnover into R&D, which is quite significant being a USD 3.7 billion company.
There will be significant investments in renewables and in the maritime industry, while there will be a major emphasis on the Arctic for oil and gas. You generally hear “deeper, colder, harsher”—for the UK, we have our own little version of “deeper, colder, harsher,” which is around the Shetland Islands.
Another big exciting area is the floating market where we are today one of the biggest players. DNV GL has some 260 offshore E&P units in class and, with current new buildings, about 40 percent of the world floating market. We are looking at the next generation of FPSO’s and also rigs to put them another 25 years into production in these deeper, colder, and harsher environments.
Moreover, I believe that the UK is a center of excellence for subsea technology and skills. DNV GL has positioned itself very much in the subsea supply chain in both the advisory side of the business and also on the verification side because ultimately when a subsea component goes wrong, it is hard to get this fixed. Whenever the risk or complexity is high, you find a role for DNV GL. Furthermore, we export this expertise to places such as Brazil.
What are your personal ambitions for the UK operations over the next three years?
Regarding the overall enterprise risk in the oil and gas sector, we recently published a report, “Challenging Climates: The outlook for the oil and gas industry in 2014.” The report provides a snapshot of industry sentiment about the year ahead and is based on a survey of more than 430 oil and gas professionals and in-depth interviews with more than 20 industry executives. What is interesting for DNV GL is understanding these challenges and being active in this debate. In the survey, we received a lot of the feedback about people. Nearly half (49 percent) of respondents cite skills shortages/the ageing workforce as a major concern. Moreover, 20 percent of operators in Europe believe the oil and gas industry’s prospects for growth in 2014 are less certain than they were in 2013.
Therefore, my personal ambition is to be thought of as a leading player in both assisting the industry with its challenges and leading the industry in some of these areas, especially regarding safer, smarter, and greener solutions.