Business

Subsea 7 sees long-term growth for its regional headquarters in Greater KL

"Greater KL provides good value at a competitive price. Taking everything in account, Malaysia truly offers a strong value proposition for companies like Subsea 7."
— Olivier Blaringhem, Subsea 7’s vicepresident for Asia Pacific and Middle East
Subsea 7, a world-leading seabed-to-surface engineering, construction and services contractor for the offshore energy industry, finds Greater KL to be an ideal location to conduct its regional operations. The company relocated its regional headquarters to Kuala Lumpur about 18 months ago and has taken a long-term perspective for its business here.

“Despite challenging market conditions in the oil and gas industry over recent years, Subsea 7 managed to deliver projects while maintaining a strong balance sheet and growth through managing its cost base, establishing alliances and partnerships, strategic acquisitions and investment in innovation and technology. We have been able to provide cost-effective technical solutions for our clients. We have taken a leading role in finding new ways of working using technological innovations to adapt to the new market environment and to lower the cost of our projects,” says Olivier Blaringhem, Subsea 7’s vice-president for Asia Pacific and Middle East.

Subsea 7 is a world leading specialised contractor to the offshore energy sector. Its core strengths in project management and engineering have been demonstrated by successful completion of over 1,000 projects, large and small, over the last 40 years.

In the past three years, Subsea 7 overcame headwinds in the oil and gas market by maintaining internal capabilities and expertise while reducing capacity and cost. The company continued to invest in technology and in strategic acquisitions during this challenging period and delivered strong operational and financial results in 2016. Group revenue was US$3.6 billion and adjusted EBITDA was US$1.1 billion, as clients continued to minimise expenditure in an environment of low and uncertain oil and gas prices. Nevertheless, the company’s cash position remained strong, with net cash of US$1.2 billion at the end
of 2016, an increase of over US$800 million from the preceding year.

Here, Olivier Blaringhem talks about Subsea 7’s plans for its local operations, how it develops its employees and its outlook for the coming years.
The Edge: Firstly, what drove the decision to relocate your regional headquarters from Singapore to Malaysia?
Olivier Blaringhem: It makes a lot of sense for a global company in the oil and gas industry to be based in Malaysia. Subsea 7 is among many companies that have relocated here and benefitted from the local business-friendly environment.

The Malaysian energy industry has matured and its supply chain is developed and comprehensive. Furthermore, the infrastructure in this country is established, reliable and serves our needs. Clearly, it is also advantageous to be close to our customers and partners.

We also expected to benefit from Malaysia’s talent pool. Indeed, it has been relatively easy to find people with experience, good technical skills and good communication skills. Subsea 7 has a track record of
reliable and responsible operational execution and of respecting the environment and communities where we work. We are committed to conducting our business to the highest standards of safety and integrity.

Subsea 7’s reputation has attracted experienced talent to the company and I have been impressed with the skills and capabilities that can be found in the local talent pool for the oil and gas industry. In addition, government agencies such as InvestKL eased the process of relocating our regional headquarters to Kuala Lumpur. InvestKL is very proactive and they contribute to Malaysia’s business-friendly environment. They have greatly assisted us by promoting relationships and connecting us with the right authorities and agencies.

Finally, the cost of doing business is attractive. Greater KL provides good value at a competitive price. Taking everything in account, Malaysia truly offers a strong value proposition for companies like Subsea 7.
What are your plans for Subsea 7’s regional headquarters in Kuala Lumpur?
We have been operating in this region for over 40 years and have always taken a long-term perspective in what we do. This is the nature of our business and we have a long-term view for our operations here. We have increased our headcount over the last 18 months and hope to build upon this in the future. Subsea 7 recently relocated a vessel from Europe to this region.

She is currently serving a project in South Korea. This is a significant step that speaks of our long-term commitment to our operations here. Vessels are our assets and a cornerstone of Subsea 7’s operations.
Having a vessel to serve our projects provides more opportunities for us. The Kuala Lumpur regional headquarters is currently involved in recruiting local talent to work on this vessel.
How does the regional headquarters here support Subsea 7’s operations in this region?
The plan is to develop the full range of skills needed for our projects in the Malaysian headquarters. Members of the management team that oversee the Asia Pacific and Middle East business are based here along with project management and marketing teams. The project management team looks at procurement, management, logistics and operations for our regional projects while the marketing team seek and secure new business development prospects and opportunities.

For example, we won a project in Australia early this year and are currently supporting our operations there with supervisory and procurement activities. We also oversee fabrication work for this project that is taking place in Vietnam.

The approach is basically to optimise the skills of all our employees to better meet the needs of our clients. By leveraging on the full strength of our global resources and know-how, we can respond quickly to our clients.

This also allows us to be cost-efficient and competitive and to support our clients by lowering the cost of their projects. This way, they (our clients) can embark on projects in the current environment where oil prices hover between US$48 and US$58 a barrel and do better than breakeven.
Growth in the oil and gas industry is expected to slow significantly next year. What is your outlook for this sector and how has Subsea 7 addressed the challenge of lower oil prices?
The last three years have been difficult for the oil and gas industry. During this period, we continued to deliver value to our shareholders and our clients by lowering our cost base and improving efficiencies. We have and will continue to invest in capability, i.e. develop our people, modernise our operations, enhance our fleet and grow our technology portfolio. It is our capability that allows us to stand apart and be a market leader in offshore engineering and construction.

The outlook for the oil and gas industry has improved marginally. Demand for oil is slower but it is still growing. The need for new fields (for oil and gas) to be developed is still there but it will continue to be a challenging period especially for contractors in this market. However, we do expect 2018 to be a year of growth for Subsea 7 in this region. We are seeing some opportunities in Malaysia, India, Australia and the Middle East.
How does Subsea 7 add value to their projects by establishing a local presence?
Subsea 7 looks to add value to our clients and to keep costs competitive. This is done by investing in people, technology, assets and by building a local presence and working with local partners. A strong local infrastructure allows us to respond with sensitivity to local opportunities while enhancing our overall position as an effective global partner. With a local presence, as in Malaysia, we can be fully aligned with the strategic and commercial objectives of our clients at the very early stage of a project.
Tell us a bit about your training programmes for local employees.
People are the foundation of our business and central to our success. Subsea 7 has approximately 8,500 employees around the world. It is our skilled and experience engineers, project managers, onshore and offshore construction and support staff that enables us to deliver projects on schedule.

To help train our people, Subsea 7 has an engineering graduate programme that takes place all over the world. In this programme, graduates are based with us locally for three months before they spend time with our operations in Norway and Scotland, each for a year respectively before returning to Malaysia.

There, they learn technical skills and more importantly, establish an international network of contacts. Oil and gas is a global industry, Subsea 7 is an international operation, and our employees need to have contacts in other countries and a worldwide perspective. The programme supports development of our leaders and our managers for the future. This year four employees from Malaysia have been selected for this programme.

Source:The Edge Malaysia