with Olivier Konig, Country Manager, Weatherford India
Mr. Konig, could you start by briefly introducing Weatherford’s business model in India?
Weatherford started direct operations in India in 1996 when the group opened an office in Mumbai.
Since 1996, we have been extensively expanding our client and service portfolio. Our first client was ONGC, and over the years we have worked on projects for British Gas, Cairn Energy, Reliance, GSPC, and and many more. We have been associated with almost all operators in India over the years. On the Unconventional resources front, we have been working with Essar, Reliance and BP.We have positioned ourselves as a preferred products & services provider with all major operators in India. Weatherford operates six entities in India and these cover onland drilling rigs, oilfield services, a completion equipment manufacturing plant (Baroda), a screens manufacturing plant (Mehsana), a speciality chemicals unit (Jodhpur) and a software division (Mumbai).
Our broad footprint helps us to engage with clients in both the up-stream and mid-stream areas of the oil and gas business.
For the first quarter 2011, political disruptions in the Middle East and North Africa and challenging weather events in Australia and China lead to a significant decrease in revenues for the region. What has been India’s specific performance?
Weatherford’s performance in India this year has remained quite stable.
It is important to consider the company’s performance within the Indian context.The E&P business generally began slowing down in 2009, which affected all the service providers in India. This slow down eventually caught up with us in India in the first quarter of 2010.
During this tough year, all operators looked at retenders and at this time the industry saw a price war amongst the service companies trying to regain what they had in the past. We are now mid-2011 and most have gotten back their share of the business. Apart from the recovery portion when all the clients got back on track, the last couple of years have been of struggle for most service providers to India’s O&G industry.
The country used to be – at least on a regional scale – a kind of a backbone where things remained very steady and were not really subject to the variations of the world market. When the global markets are affected by a crisis, India is always affected a bit later, and not as badly as in other parts of the world. Apart from the last recession, India has been considered a place of good growth potential. It still is, but the market has changed. From the period 2003 to 2005 – when I had my first assignment in India – and today, it is a completely different market.
What has changed over the years? What most struck you when you came back in October 2010?
Over the years the country’s O&G business has evolved and the country is today much more open to new technologies, which supports Weatherford’s growth strategy.
There have been several new private Indian companies that have secured blocks in the latest NELP rounds. Overall, during the ninth NELP round, though there was much more interest from foreign companies, than previously, and that ONGC this time only got 10 fields out of 34. The majority of the remaining blocks have been secured by other private Indian operators It is good to see that companies such as Cairn, British Gas and British Petroleum, have major stakes in India. Nonetheless, supermajors are still shy to come and operate in India. The situation has improved but India still has a long way to go.
What are the products and services that apply the best to the specificities of the Indian fields and business environment?
Weatherford offers fit-for-purpose technologies to its clients to help them maximize the value of their assets.
Weatherford has pioneered the drilling of deep hot wells on the east coast of India. These are some of the toughest deepwater environments in which we have deployed our tools in and have been immensely successful in helping clients meet their exploration objectives. Its been more than 5 years since we started out on the east coast and are currently involved in the development drilling in that area.
Deep offshore operations require top class technologies. This sector has been driving the trend for India to accept, bring in and adopt new technologies, being pushed by service companies as well, considering we have the knowledge, the understanding and the experience in this sector.
Weatherford has strong reservoir evaluation and production capabilities within its group in India and we have been extremely successful in enhancing production for our clients. We have automated an entire field operating SPRs, which has significantly brought down the opex for the client. In juxtopposition to the reduction in opex, we have significantly contributed to the production by preventing downtime due to potential failures of these pumps—a challenge faced due to the remoteness and logistics associated with the field before Weatherford was brought in to provide a solution. Weatherford’s thru-tubing group has done pioneering work in assisting Indian clients in remediating shut-in wells and bringing them back on production.
There are numerous other examples where Weatherford has offered solutions tailored to meet the Indian client’s needs.
The use in India of the Managed Pressure Drilling (MPD) control system is often taken as an example from the group as one of its main achievements. How important has this technology been in your development and branding in India?
Weatherford has been aggressively reaching out to clients in India to educate them on the benefits of MPD. This technology essentially helps clients drill wells safely and efficiently, where conventional practices would not be economically viable. We were involved in the region in 2008-09 on an offshore MPD project. Recently we have signed agreements with clients operating in north-eastern India to use this technology to drill a few onshore wells that would have been difficult to drill and complete in the conventional way. There are a numerous areas in India where geology and complications arising out of conventional drilling practices mandate that we adopt MPD technology to drill the wells. We foresee widespread application of this technology in India. Weatherford’s leadership position in this technology will help in growing this business in the coming years in India.
To what extent younger technologies of the group are available to the India market? How receptive is India to new technologies?
Generally, Weatherford offers only fully commercialized technologies to the Indian market. Its the market that decides accessibility to new technologies. India is a very price sensitive market and investment in new technologies are driven by the ROI economics, which can be vastly different from other areas such as the Middle East.
That being said, NOCs and IOCs India have a very different approach to technologies. The IOCs are very forthcoming and open to trying new technologies while NOCs often have stringent procurement.
Besides, with NOCs, There is not enough flexibility to allow the addition of new products and services, when these are not part of the scope of work that was decided initially, even if they are brilliant products that could meet their objectives and more.
The development of offshore operations in Brazil, with Petrobras alone set to spend more than $108 billion on E&P through 2014, has been one of Weatherford’s late focuses. Yet similar developments are also happening in India, with the NELP rounds and an increasing focus on upstream operations to guarantee the country’s energy security. To what extent will Weatherford also be part of the growth of the Indian market?
There is no reason why Weatherford would not be part of the growth. The company has been part of major projects and major discoveries in India for several years. This has put us in a strong position and India will continue to be one of Weatherford’s focus areas for the future.
Every market is different, so could you tell us what is Weatherford’s positioning amongst the big four in India and its main differentiating factors?
We establish ourselves as a privileged partner by working closely with the client. We try to anticipate their needs and suggest feasible solutions. Our broad portfolio of products and services ranging from prospecting to production ensures that we are able to address almost all of the needs of our clients. The idea is to focus on the client’s goal and bring all we have to help the operator.
Mr Pillai of Noble Denton explained to us that as a consultant, his role is to explain to the international companies willing to invest in the market that safety comes first, and that if the projects are risky, no matter how attractive is the field, they should not come. What has been Weatherford’s role in ensuring that safety actually comes first?
As contractors, we are the ones on the rigs effectively doing the job, so I have worked to empower every employee working on the client’s rig to be able to raise the flag and say ‘stop’, when men are at risk.
I strongly emphasize on the importance of safety and spread the word, especially in certain countries where, culturally speaking, employees would be reluctant to say ‘no’ to the client or someone in charge of the rig. But doing so actually saves lives.
In fact, most of the time, the clients are thankful for this approach. They are thankful that somebody had the courage to step up and say ‘stop’. We work in a dangerous environment, where there are so many parameters that can go wrong. So giving the ability to every single employee to say ‘no’ is a comforting factor both for us and for the client in the end. It is not a matter of weakness; the client would actually see that as a strong professional attitude.
When we are operating on a floating rig located in deep offshore generating a couple of hundred thousands dollars a day, it is a big deal to say ‘no’. Yes, every minute counts; but when it is unsafe, you just need to be able stop.
There are also particular technologies – old or new – that can help drilling in safer manners. As a company, we always suggest to use those particular technologies before any other ones. For tubular running services for example, we encourage the use of rig mechanization equipment to perform operations remotely wherever possible, alleviating human exposure on the rig floor.
Looking forward, what is your strategy to grow Weatherford within the Indian market and position yourself as a partner of choice for drilling and allied services in India, and where will you take the company in five years from now?
We will continue to broaden our client base in the coming years. We were very product dependent in the past, but with the acquisition and integration of various companies over the last few years we have been able to diversify our portfolio and offer capabilities that were previously not possible. As I mentioned before, we offer end-to-end solutions for the O&G business and you will see more of Weatherford in India in the coming years.
Our strength is in integrating our offerings and this not only covers the drilling, evaluation, completion, production and intervention businesses, but also the early production facilities / FPSO etc.
We are ideally positioned to be leading integrated services providers in the future in India.
What is your final message to the readers of Oil and Gas Financial Journal?
There is tremendous potential in India. Our goal is to continue being a major partner in helping the O&G industry to maximize the value of their fields and assets. We have been part of the history and we want to be part of the future as well. A lot of things are yet to come.