with Per Thuestad, Trico Marine Group Brazil
Trico Marine Group derives from the 2008 addition of Deep Ocean and CTC to Trico Offshore which coincidently occurred just after you came to Brazil to establish operations here. Can briefly present the challenges faced?
PT: DeepOcean came down to Brasil in the beginning of 2008 to establish an operational office. Our first challenge was to recruit the team for the offshore operation and the onshore organization. This was a new learning process for us trying to establish a new organization in a foreign country and trying to understand all rules and regulations that will apply. But already in May of that year, Trico Marine came in and bought up the company just before the startup of our first contract with Petrobras.
Trico Offshore may have been here since 1996 but the group didn’t take off until 2008 through contracts with Petrobras. What’s the scope of your operations today; what is the most important piece for the group?
The offshore operations are important to the group as they allow us to bring in vessels to Brazil which supports the rest of our operations as a local subsea company. As a whole, the group is changing its strategy from a towing and supply focused company into a more subsea-centered business. Today, this means we are selling older vessels, keeping the new ones and transferring some into our subsea services segment.
In addition to expanding the subsea business, Trico Marine is also looking to leverage their international presence. What can you take from the Brazilian market that can be applied elsewhere?
MV: A good example of this would be our plans to offer our subsea services in West Africa based on our experiences here. As a result of this initiative, the Trico Marine Group VP Americas and West Africa is actually relocating to Brazil. These locations have similar aspects when it comes to deepwater possibilities and we want to take advantage of that.
PT: Our main goal for this year is controlled grow in the subsea sector.
MV: HSEQS is our first target and Trico Marine Group has an excellent 5 year track record. We recognize that Petrobras is a particular customer and we see this integration between Trico Offshore, Deep Ocean, and CTC Marine provides us a strategic advantage to understand the customer and help them develop their projects. Importantly, we also know the Brazilian bureaucracy so we can guarantee our customers a firm business proposal which gives us an advantage against outside competition.
Today, Trico Marine Group is more aggressive in the production phase than in the exploration phase of the value chain due to the experience gained in the North Sea supporting Statoil’s development of the region. With this shift in focus and combination of offerings, Trico today is an extraordinary supplier. For instance, Trico Marine Group is one of the biggest survey companies in the world conducting over 5000 km per year for Statoil in the North Sea and as well as being one of the largest installation and trenching companies in the world.
PT: Our focus is not to be an EPIC deliverer but instead to support other industry players of varying sizes such as other subsea contractors and oil companies.
PT: The North Sea may be shallower but we are able to transfer all these experiences into Brazil. Also, we have a long experience in IMR and survey work in Europe and this knowledge is transferrable to Brazil.
Trico Marine Group’s strengths come from its various divisions including CTC and Deep Ocean. In the local market, how much do you feel the industry recognizes you as one unified group and not separate pieces?
MV: I meet with our customers on a daily basis so I feel I have a good understanding of this. Trico Offshore bought Deep Ocean which included CTC in 2008 but as you know these things do not change easily. But I can guarantee that the perception of our customers is absolutely changing, mainly by the fact that we are studying the possibility to develop technologies that no one has today for the subsea area to attend one customer requirement. This is a true demonstration that there is improved recognition of our capabilities.
PT: This is also the reason to hold onto our brand names when we initially combined the companies. We didn’t want to start from scratch with our branding in the industry and it will stay that way until we are fully recognized under the group umbrella.
MV: More than just names, while each division is subject to ouroverall corporate strategy, they maintain their experience and competitive edge in the marketplace.
In this way each division benefits from retaining their knowhow and culture while also incorporating the group advantages. This reflects on the operational outcome.
The pre-salt findings have brought a lot of attention to Brazil which has also brought a lot of competition to the subsea market. Today, what do you think Trico Marine can offer that other subsea companies cannot?
PT: We have a large variety of offerings from towing and supply to subsea to trenching which gives us a spread of solutions for our customers to choose from, while our vessels also cover a variety of applications so we can combine them for different demands. This means Petrobras or other customers only have to go to one vendor to get three different services.
The tender phase is expensive for companies to go through so the more they can minimize this process with fewer vendors to fulfill the same amount of needs, the better it is.
Do you find that the market is recognizing the synergies you’re offering?
MV: Trico Marine recently provided 65 km of trenching while also covering the surveying needs of the project, which is a perfect example of how we can be extremely competitive. On the trenching side, the challenge is to interpret the survey so by doing it ourselves we eliminate the potential for one provider to blame another for a project failure.
PT: It makes it easier for the customer not only to tender the contract but also to manage the contract.
MV: Another good example is when we converted several of our towing and supply vessels then staffed them with ROV capabilities to meet a customer need.
When we met with Nelson Ney of Baker Hughes he mentioned the increasing importance of local content in Brazil. As Trico Marine brings a lot of industry leading technologies to Brazil how does this affect your operations?
PT: All of our operators are Brazilian and it’s been a main focus of our company to hire Brazilian staff to work in their own country. We understood that we could not compete in the local market with foreign staff operating our equipment. This meant developing a training program with several experienced instructors to teach our team here how to properly operate the equipment.
MV: This is true not only on the operation side of the business but within the management of the company as well. For instance, in our office in Macaé there are at most three expatriates. This is how we believe in running the company here.
When we spoke with Vitor Azevedo of INTSOK he made the assertion that international companies should do more than bring their operations to Brazil and to develop from within the local market. What was behind the initiative to create local talent and what are you getting out of Brazil?
PT: We’re importing our equipment which is built in Northern Europe so we need to transfer knowledge locally in order to operate and develop for the future in Brazil which is our main goal.
MV: Importantly, Petrobras is giving us the opportunity to perform jobs that we have not performed before because they recognized us as a quality supplier with the local knowledge to go one step further in challenging ventures requiring new solutions. For instance, we are in discussion with Petrobras through CENPES to develop equipment for inspection in the subsea sector. Therefore, there is value beyond the contract alone.
What do you see the Brazilian market representing for the group in the coming five to ten years as you diversify out of the North Sea?
MV: This region means that we can get higher utilization of our assets when we have the opportunity to work in Brazil when the season is low in Europe. We believe that through the opportunities present in the Brazilian market both with Petrobras and IOCs that we can double the global operational revenues of our subsea services business in Brazil.
On the macro scale, the industry has experienced a slowdown due to the conservative investment environment of the last two years. Has this experience been different in Brazil for you?
PT: Brazil is booming at the moment. Many companies invested in locations like Europe when maybe they should have invested in Brazil, this is especially true in segments like shipbuilding.
MV: The crisis doesn’t reflect on the demand in Brazil but instead on the number of offerings present in the market due to the fact that companies who cannot find business in the rest of the world are trying to obtain jobs where the industry is sustained. Over 2009, the number of offerings in Brazil has been steadily increasing over the number of contracts available which creates price pressure. Nevertheless there is a lot of business on the year horizon. Furthermore, in five years time, those companies who do not know how to operate in Brazil will likely suffer and maybe change their plans.
Do you think only a few companies will be able to compete in the long term here?
MV: Definitely. We have been here in one form or another since 1996 so we will not leave anytime soon – this is our spot.
PT: There is a lot of work in Brazil because the industry is expanding which means it can support a lot of companies. Of course, there will be some that disappear because it’s not the easiest market to work in.
MV: Petrobras is one of the few operators in the world today that can offer long-term contracts which are attractive to many other companies but we know we can obtain them and continue to grow as we have since the group was formed.
PT: These long-term contracts are fundamental to establishing operations here because they are the basis by which you can create an office and infrastructure to later pick up more spot opportunities.
There are a lot of activity in the market and just as much talk about Brazil becoming the next deepwater hub. As you come from the original deepwater hub, what is your perception? Is Brazil overtaking Norway?
PT: I think so. It’s no news that the North Sea is slowing so now the attention is turning towards Brazil, West Africa and China for offshore potential.
MV: And the demonstration that Trico Marine Group is adjusting the organization to take advantage of this hub is that our VP Americas and West Africa will manage his area from Brazil. In July Mr. Tomas Salazar will become a Brazilian resident.
Looking ahead, what would you like to see as the next milestone for the company?
PT: We’ll look to establish contracts with other IOCs operating in the Brazilian market in order to broaden our scope of operations. It’s always dangerous to only work for one company and companies as well do not like when suppliers are fully dependant on them. If anything happens, an entire company can suffer.
Personally speaking, what excites you the most about integrating these three companies on the Brazilian market? Is it the potential for diversification, specialization or innovation?
PT: My big expectation is to really grow our subsea business in Brazil and it has been my goal since coming down here in 2008 to see the Trico Marine Group grow as a whole. In the past we were a smaller navigation company in the local market and in the future I want to be a large, recognized offshore company.
Do you have a final message for our readers of OGFJ?
PT: We are a trustworthy vendor of high-technology services.
MV: Everything reflects on the company vision – to be the preferred global provider of vessels, services, and engineering for the offshore and subsea services markets whether it comes to price, availability, performance or HSEQS. This is the key element to our operations. We do not need to be the biggest but rather to meet the needs of our customers. As long as we achieve this vision then we will accomplish what our shareholders and customers want