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Leong Seng Keat from Nam Cheong

Offshore sector must standardise its way out of doldrums, say industry leaders

The offshore and workboat industry must embrace standardisation and mass-production if it is to survive the new realities of the oil and gas market, panellists at the Seatrade Offshore Marine & Workboat Middle East Leaders’ Conference have concluded.

“We only see demand for OSVs here in the Middle East,” said Lars Seistrup, md of Damen Shipyards Sharjah FZE. “Every week new vessels are being laid up in the North Sea, but here there is still demand, even though there shouldn’t be.”

Seistrup argued that the perception of the Middle Eastern shipbuilding did not match the reality. “Unfortunately some of the local operators are not viewing the local standard as good enough,” he said. “But we are good enough.

“Here in the Middle East, our costs are higher because we have higher labour costs than China, and we have to pay a lot more for steel as well.” To address this issue, Seistrup indicated that in many workboat sectors including crewboats, composites like GRP, which lend themselves more readily to mass production, would replace steel and aluminium.

Leong Seng Keat, ceo of Malaysian shipbuilder Nam Cheong, argued that the declining oil and gas market would cause a migration labour, leaving a vacuum of technical expertise by the time there was another up-cycle.

“Skilled labour will move to other markets,” Leong explained. On top of this, “Local content is not going to go away.” For these reasons, he argued, it is imperative for owners and shipbuilders to embrace standardisation for offshore vessels in order to keep training costs down. “In order for us to be ready for the market to return, we must look at standardisation,” said Leong.

Local content was an underlying theme of Seidu Sakara Foster, country manager for Offshore Shipbroker’s Ghana, presentation. “There’s an opportunity in every downturn in the market, and I believe that West Africa presents such an opportunity,” he said. “Is West Africa the most lucrative site for offshore vessels? I would say yes. There are a lot of frontiers in the region that remain unexplored.

“In the West African region, though, politics is a key consideration. Owners in West Africa must look at a local content strategy. There is a level of commitment because of these local content laws. West Africa has a strong vision for developing its local industries.”

Roy Yap, assistant president for Nantong Rainbow Offshore & Engineering Equipments, indicated that offshore would have to adapt to the “new normal” by increasing collaboration across the industry and facilitating lower prices “throughout the value chain.”

Identifying three industry leaders, Yap chose Rolls-Royce as an equipment manufacturer, Malaysia’s Nam Cheong as a shipyard, and Bourbon offshore as an operator, the latter being one of standardisation’s most vocal proponents.

Yap described an industry-wide standardisation of OSVs as a “utopian scenario”. “What if the oil majors standardised the OSVs they were willing to use?” he asked. “Then, shipbuilders would be forced to compete on safety and service.

“Formula 1 is a great example of this; so many technical regulations have been introduced that the only way to rig the race is to hire a much better driver.”

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