Offshore & Marine – Ong Choo Guan, CEO & JK Low, CFO – Singapore
Ong Choo Guan, CEO & JK Low, CFO of Viking Offshore and Marine articulate their company’s diversification strategy including its expansion into being a rig-owner. They have moved into the oil and gas sector through a bolt-on strategy, which has seen the company grow rapidly. The gentlemen also allude to their expectations of wider growth across the region.
Can you introduce Viking Offshore and Marine and its activities since the 2010 acquisition of Viking Airtech?
Ong Choo Guan (CG): Until 2009, the company had been known as Novena, and was a holding company. The then owner (today’s chairman) had a background in energy, and so it was natural for him to seek to move into the marine offshore sector. The first company acquired was Viking Airtech, which prompted the name change across the business unit. In Singapore, the marine sector is active and growing. For this reason, the business sought to increase the scope of its activity in this sector by acquiring further marine service providers and engineering companies.
Viking Airtech had been a leading provider of heating, ventilation and air conditioning (HVAC) technologies. Subsequently, the business felt it had not yet achieved a critical mass- so went on to acquire Promoter and Marshall, two other marine companies.
JK Low (JK): Promoter is a business providing winch systems and Marshall is an instrumentation business which was later added as part of our bolt on strategy. Speaking with customers, the business knows that clients appreciate our aim of becoming a truly ‘one stop shop’ supplier- meaning far less organisational hassle for them. Viking is seeking to approach its expansion from a value-chain perspective, adding value through the tiers of client’s need for equipment. In expanding our offering, the business is also building a deeper relationship with its clients.
You are now acquiring your own offshore assets- rigs themselves- what does this represent in terms of a milestone moment for the company?
JK: It is a significant milestone from our point, expanding our business beyond solely engineering based, system capability work.
Moving into offshore oil and gas asset ownership is quite different. There are more and more competitors offering system capability products- for this reason this expansion represents a move into a clearer market. The business saw an opportunity to move upstream and build a more stable, reliable revenue generating business. This is a strong secondary ability to add to our portfolio, alongside our traditional equipment offerings.
Late last year, Viking entered a joint venture which means we now own 30 percent of two jack up rigs. These are still in the process of being built.
How did this partnership add onto your capabilities?
CG: When one talks of partnership, there are two aspects to this- our core business is an engineering business, where we continue to expand our portfolio. A partnership with a Korean crane operator has allowed us to expand our services with regard to lifting activities.
With regard to our marine assets, we have partnered with experienced players, which creates secondary benefits by widening the range of equipment Viking can directly feed to our rigs. The acquisition of a proportion of these two rigs will generate income in the longer term. Until then, fitting out these rigs with our own branded products has greatly bolstered our other business wing in equipment supply by providing a welcoming destination for equipment products.
Viking must stay competitive- it is obvious that being able to provide many of the core systems for our own rigs adds to the company’s competitive edge. Acting as a rig owner, we have a very clear perspective on what the typical client seeking equipment from our traditional business lines is looking for. It gives Viking a clear understanding of exactly the quality and client care any customer will be seeking.
Are there any key projects which have so far been particularly prominent in establishing Viking’s brand name in domestic or foreign markets?
In 2013, Viking successfully and delivered high specification HVAC and explosion proof equipment to Total E&P on three separate projects. These entailed use of our own designs and production capabilities. These met all the stringent hazardous environment requirements to be installed on some of Total’s offshore platforms.
In the same year, for Shell, Viking delivered similar HVAC products for their operations in the Philippines. Over that year in total, we acquired a good number of product orders including the largest contract we had secured to date- this was certainly a significant achievement for our company.
JK: Returning to the idea of putting our own system on our own rig, not only are we able to outfit our own rigs, but as we expand to deliver parts for client’s rigs, they already have evidence we can deliver holistic solutions- the proof being the operations of our own assets. Getting that first unit onto a client’s rig is hardest but this precedent often leads to further systems being incorporated into the system by our customer base.
Every owner is seeking the best and cheapest products – once they know we can provide these qualities in one product, it becomes far easier to demonstrate these are attributes we deliver across the board.
How do you ensure consistent delivery of these products across the board?
CG: In Asia, one must deliver products of good quality, at low cost. In order to achieve this, Viking was one of the first foreign firms to produce HVAC systems in China. Initially, we did not advertise this – as other producing areas were considered more prestigious. This is not the case now and the country is recognised for its quality products. However, this allowed us to produce with very good quality margins in a factory managed by Singaporeans to high standards.
The cost of land is cheaper in China and there is easy access to reliable infrastructure there.
The Chinese are good, intelligent people and there are plenty capable engineers there. Today, there are more competitors producing in China and elsewhere. We were a leader into this market, however and have retained that position. This has helped us deliver quality, cost-effectively from early on.
JK: The important thing is that although the equipment is made in China, the quality is controlled from Singapore.
Singapore’s authorities are eager to attract energy businesses to the city. How have the fiscal regime and policy environment helped Viking Offshore Marine to develop their business?
JK: Singapore as a country has been very supportive of enterprise. This is no secret. What Viking particularly appreciates, however is the support that the government has given the business to expand overseas. Quite honestly, Viking is a company of median size- resources are not infinite and must be utilised carefully.
Collaboration with the government can help the business through accessing funding and expertise to support our activities. Recently, when Viking expanded to Brazil, the Singaporean authorities assisted us move into this market. Having traditionally been based in south east Asia, moving into this region was a whole new challenge. Issues like time difference were new considerations for the company- and these challenges had to be addressed as fast response to customers, for example, is something we have always valued.
The assistance of the Singaporean authorities, combined with the presence of extant Singaporean businesses that we were familiar with here already meant that the move to Brazil was less challenging than it might have been. There was already a network of companies that we could tie into.
CG: Good, stable government with consistent investment policy implementation and Singapore’s central location in Asia means that a great deal of money has come into Singapore. Asia pacific is a great growth area for the energy industry and Viking has certainly benefitted from the fact that a critical mass of energy companies has emerged in Singapore.
JK: Many of the large international companies know it is cheaper to source local parts than import equipment, which has significantly stimulated the growth of local businesses in turn. This industrial ecosystem now supports itself- which was the original intent of government policy in the first place.
What are your own personal insights into guaranteeing growth across the wider APAC region into the future?
CG: In the longer term, Viking Offshore Marine will continue to seek to expand its capabilities, moving itself to offer more value throughout the value chain. A useful example of this was the acquisition of our winches business. Our first custom designed winch, for specific project requirements was designed a year ago. This offering has grown significantly to reach a prominent standing how, particuarly given the scale of the business line when we acquired it.
The same applies to our Marshall business line. The company engineers quality, and the business has grown extensively since we acquired this business. Viking plans to continue to expand – into lines such as dynamic positioning systems – in order to continue to increase our company’s growth.
JK: To wrap up the interview in a simple way, growth is simply the result of staying relevant to your customer.