OSV operators looking to win work on the region’s massive offshore development projects need to better understand the hardline oil companies are taking on safety standards, local content requirements and fuel efficiency, McDermott Middle East director of marine operations Douglas Korth told delegates at Riviera Maritime Media’s Middle East Offshore Support Journal Conference in Dubai.
Over the next five years, at least US$130Bn will be spent on offshore development. Abu Dhabi National Oil Co (ADNOC) plans to ramp up its production to 4 mbpd by 2020 and 5 mbpd by 2030. Work is also underway on the Hail and Ghasha artificial island projects. They will need as many as 160 vessels over the next 2-4 years.
“Because of this massive demand we are seeing our clients [the major national oil companies] being less flexible and more procedural and that has a specific implication for the OSV operator,” Mr Korth said.
He told delegates there is a strong correlation between the reasons McDermott might stop or reject an OSV for jobs in Qatar and Saudi Arabia and the future demands and direction of its customers.
“We have broken these into three categories: safety, mechanical, and people. And what is really interesting when we reflect on the last three years' [records] is the repeatability. Safety, be it equipment or personnel, is now trending a lot higher, accounting for about half of the stop items.’’ Mechanical defects have been a fairly constant 30%. Of particular concern is the recent increase in safety observations linked to crew. “This trend was not in the statistics two years ago.’’
Relating these findings to intransigent oil company requirements, he added that his clients were now looking for evidence that crew had been through competency schemes. “Clients will not simply accept CVs as they have done in the past.’’ The prevailing oil company view is that if something looks bad, it is automatically bad – a marked contrast to a more interpretive approach taken to HSE and personnel issues in the recent past.
The McDermott response goes beyond pointing a finger at OSV operators and saying ‘fix it’, Mr Korth said. The contractor is now more actively pre-inspecting vessels and has increased the frequency of personnel visits to OSVs during operations. “One thing I think we need to work on is earlier communication of our project needs with OSV operators. We also need to share lessons learned with you.” McDermott will shortly implement a more codified approach to the vessel evaluation process “to make sure we get a rounded view of our assessment of vessels.”
Local crew content requirements on these mega projects however is a demand “we’re going to obviously push down to you,’’ he said adding that on some of projects local content requirements will rise from 40% today to 70% in 2021.
One future trend not reflected in the OSV statistics is a changing oil major attitude towards fuel efficiency. To date, Saudi Aramco has provided its contractors’ fuel. However, on a recent bid it withdrew this provision “generating quite a bit of panic among not just ourselves but competitors unfamiliar with the Saudi market. Aramco reversed the decision but Mr Korth’s expectation is that “in some form or fashion, [Aramco is] going to make fuel become a part of the commercial assessment of a tender. This means we will need more fuel-efficient vessels because fuel is going to become an important part of our competitive advantage, or disadvantage.”
This is especially important when clients specify that a supply vessel be attached to each individual major vessel on a project. McDermott can sometimes make the case that a single supply vessel can serve more than one vessel which is obviously to its economic benefit. To continue to make this case if responsible for fuel, the contractor will need OSVs capable of making faster transits, as fuel efficiently as possible.
While Mr Korth’s message was stark, there was also encouragement for operators of older tonnage. McDermott had no fixed policy on the age of the vessels it tenders and nor was a vessel automatically ineligible for its consideration if it had spent time in cold stack.
“The easy answer on both those questions is ‘no’and ‘no’ he told delegates. Our demands in these areas mirror what the clients set out in their specification.’’