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Nantong Rainbow Offshore & Engineering exec speaks on standardisation ‘utopia’

On Monday at the Seatrade Offshore Marine & Workboats Middle East conference, Roy Yap, assistant president of Nantong Rainbow Offshore & Engineering Equipments, discussed his vision for the future of the Offshore Oil and Gas market: standardisation. Seatrade Maritime News caught up Yap for more details.

“We primarily focus on OSVs and anchor handlers,” explained Yap. “We also have non-oil related products – a wind turbine installation vessel and a heavy lift barge. This is our move to diversify away from oil and gas, which is quite challenging now.

“There was a big tender earlier this year, with Dong Energy – it shows the desperation of the market because for that tender there were around 40 shipyards and eight designs.”

Quizzed how has the company been affected by the sharp drop in oil prices, he said: “Our main product line is OSVs, and in the boom time, going back three years, your commoditised AHTS and PSV was fine. But right now, because of the oversupply, it’s not wise to say ‘I can build PSVs, I can build anchor handlers…’ your options are very limited.”

As to whether this problem can be mitigated by standardisation. “Innovation happens when it is incentivised. I’m being very fair to the Norwegians here, but why are all the most sophisticated vessels in the world built and operated in the North Sea? Simply because the charter rates there – then, not now – supported it.

“Statoil had very high operational and safety standards and paid the charters that justified those vessels, there was a lot of one-upmanship. Everybody did a lot of specialised designs. When you specialise, your costs are very high, because you’re only going to build one or two of it, and then there’s no more series, because the next guy’s going to one-up you.”

“That contrasts with the Asian market because the designs are simpler,” Yap explained, “and you have longer series. So there’s already a degree of standardisation there. One hull, built 20 times, and it’s owned by three different shipowners who don’t mind not one-upping each other, because charter rates are lower.

“Now, oil prices are bad. On the competition front, oil majors are really beginning to standardise designs – in their platforms, and their tender requirements on ships. So let’s say ADNOC and ARAMCO harmonise their requirements – they’re operating in the same area, after all!

“In theory there would only be two or three designs that meet those requirements. You don’t have to build something special just to meet that. That ship, already in the region, could swap between the tenders.

“Now imagine this on a global scale – not just in the Middle East. Imagine we could take the best of both worlds – the good designs in the North Sea, but try to extend them to longer series. UT755, the Rolls Royce design – 179 vessels have been built. This is a proven design, that people are familiar with, but owners can use it in different ways and still survive and make money.

“If you have a long series then your production processes will be optimised to the product. You can’t optimise the production process if you only have one. If I give you 100, you have already thought – ‘how am I going to do it better?’ If you have quantity of volume, the production process will optimise itself, to make it faster, and cheaper.”

So how long will it be before we see such a large scale standardisation. “Some people believe this is happening, others believe it’s utopian. I believe it’s happening.”

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