“I’d like to get back into floating production and storage offloading units (FPSOs),” said Jim Moffat, ceo of Lamprell. “We built parts of 18 FPSOs before. I believe the FPSO business is coming back. If it does, I’d like to get back into that business.”
Data cited in industry reports show that the number of FPSOs in operation around the world increased from 83 in 2003 to 153 in 2013. “FPSOs will remain active and in demand for offshore exploration of oil and gas, in particular, the offshore areas of Brazil, West Africa and North Sea,” said International Maritime Associates in a recent report.
Moffat says that Lamprell will consider bidding for any modular structure. “There are also a number of upstream plants that are modularised. Last year, Lamprell built 15 onshore modules for the Laggan Tormore project in the Shetlands, for Petrofac. The ultimate client was Total. In the case of the new product lines we would like to get into, we are going to have to test the market. We don’t win every bid but we are going to bid seriously,” he said.
Lamprell said at the end of December that its bid pipeline rose fractionally to $4.7bn, up from $4.6bn at the end of June. “The $4.7bn [order pipeline] is conventional bidding. That's what we would bid conventionally, so to speak,” he said.
Lamprell is bidding for a major onshore liquefaction project for an undisclosed party. “The LNG project is the first one [of its type] that we've bid. It's an international client. I just think there's an opportunity for us to broaden our offering and hence increase the potential bid pipeline and give much more security to our revenues and profitability going forward if there is a downturn in any of our current core product lines.”
“Modular solutions [are] what we build. Ultimately drilling rigs are a modular solution, as are living quarters, or oil and gas production units. Whether it’s an FPSO, or LNG plant, fundamentally these things are still steel structures that are full of piping, have some electrical and instrumentation and equipment and some architectural [elements]. To the uninitiated, they all look highly similar,” he said.
“There is going to be a downturn some time in all major markets and product lines. They are cyclical in nature. If you have six or seven product offerings and you can competitively participate in all of these, you get a much steadier, much more predictable business. I am trying to move up to Tier 1 clients. We are trying to diversify so that our results are not affected to the same extent if there is a dip or peak in a particular business stream.”
Although the idea of increased rig intensity is the bane of the upstream industry as both onshore and offshore oil becomes deeper and more distant, it is a boon for Lamprell. “If [that’s] true, it’s an opportunity. If people have to drill more wells to get the same amount of oil, you need more rigs to do it. We obviously build and refurbish rigs. Therefore, greater demand for rigs is good for business.”
Lamprell claims to have 60 percent of the regional rig market. Profitable in all of the past five years except 2012, it saw revenues of $1.09bn last year and returned to the black with income of $36.4m.
Now 15 months with the company, Moffat’s arrival has had a salutary effect. “I am very pleased with our progress in the year. We've turned back into profitability, we've changed the management team a little bit, we've brought in some fresh faces. I am very pleased with the resulting team. We are performing on all of our projects very well. They are all on budget. Our safety is world-class, our quality is world-class. Our bid pipeline is big. Right now, I believe we have a very solid future.”
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