Adam Cheesman is marking one year since moving to Perth in Australia permanently from the UK. As Operations Director he was tasked with growing our business in the region.

“I was sitting in Aberdeen 18 months ago, finalising the strategy for the market entry of our Operations business and growth of the overall business,” he recalls. “To be sat here now and looking back over the past year, we have achieved what we set out to do despite the challenges that Covid-19 has thrown at us.

“We now have a stronger business after putting the foundations for growth in place, we‘ve increased our brand recognition, we have a team that is growing to meet the demands of the new work we have secured. We’re on the right path.”

THERE’S OPPORTUNITIES APLENTY IN AUSTRALIA AND NEW ZEALAND, AND WE’RE WELL PLACED TO SEIZE THEM – AS OPERATIONS DIRECTOR ADAM CHEESMAN AND REGIONAL DIRECTOR JOSIE PHILIPS EXPLAIN

LOOKING BACK TO LOOK FORWARD
With offices in Brisbane and Perth, Petrofac has been present in Australia for around 10 years through its asset consultancy business.

One of the business’s early successes in the region came in 2015 when the Technical and Consulting Services team supported INPEX's Ichthys LNG project, the largest discovery of hydrocarbon liquids in Australia for 40 years. It’s a client that Petrofac still supports today and just this year we extended our contract with INPEX for a further three years.

While Petrofac is a relatively new kid on the block in Australia, it has built a strong reputation in well engineering in New Zealand. The wells business began life as SPD, of which Petrofac acquired a share in 2007, before buying the company outright three years later.

Success came in 2011, when the team won a significant project drilling offshore for client OMV. In 2012, New Zealand then introduced well examination as a regulatory requirement, becoming only the second country in the world to do so. Following high-profile well control incidents in the Gulf of Mexico and offshore Australia, there was a renewed focus on ensuring that risks were identified and mitigated.

Petrofac worked closely with the New Zealand government to compile the well engineering guidelines for the industry. The work helped Petrofac become the go-to well engineering company in New Zealand, and we’re still the main provider of well examination services in New Zealand today.

OFFERING DIFFERENTIATED SERVICES
With the arrival of Adam and the appointment of Josie Philips as Regional Director for Well Engineering, there is a golden opportunity for the business to evolve in the region and expand on earlier success.

They join a predominantly local team who are based across Perth, Brisbane and Auckland. The team is continuing to grow to meet the demands of new work and ensure the business is best placed for future growth in the region, with the most recent appointment of Anna Keen to the team in Perth. “I’m delighted to welcome Anna to the team – she brings more than 15 years’ experience from various senior energy roles across the region,” says Adam. “Her expertise will ensure we drive in-country value, through implementation of best-in-class recruitment strategies, industrial relations and indigenous engagement programme.”

Adam and the team are focused on growing multiple new service lines, which have been strategically selected because of their market attractiveness and our anticipated ability to secure that type of work in Australia. They include Operations and Maintenance (O&M) Services, Engineering Consultancy Services, Duty Holder Services, and Decommissioning Services.

Some service lines were also strategically ruled out from our strategy, as Adam explains: “Brownfield engineering, for example, is a particularly saturated service here in Australia and it would take a long time to make an impact in this area, and ultimately represents an extremely low margin opportunity. Whereas we already have a strong presence in Wells and Engineering Consultancy, and we are focused on growing these areas.”

Operations is an area with perhaps the biggest opportunities. One of the reasons for this, says Adam, is the level of the maturity of the industry – the market in Australia is significantly less mature than the UK. The last ten years has seen a proliferation in new facilities, onshore and offshore, with the majority of the focus being on construction and not on efficiently operating and maintaining assets.

“They are now getting to that stage where many of these new facilities require maintenance and we’ve been doing the same thing for our clients in the North Sea for more than 25 years,” he says. “From our ability to plan and execute operations and maintenance, to the way we manage the training and competency levels of our technicians – Petrofac can differentiate itself from the services available in the market here.”

While the Duty Holder model is extremely underutilised in Australia, Petrofac enjoys a majority share of the market in the UK. The UK and Australian regulatory frameworks are almost a mirror image of each other – and our knowledge, experience and expertise in this area means we are seen as a trusted pair of hands.

“The procedures we pioneered in the North Sea have similar relevance in this market,” added Adam. “Both regulators also have a very close relationship, with NOPSEMA often looking to their UK counterparts for guidance. The feedback we received was that many of the examples which the UK regulator provided to NOPSEMA relating to the Duty Holder framework were Petrofac examples.

“Because of the difference in the maturity of the markets, this model will become more and more attractive over the next five years in Australia as the major IOCs begin divesting their aging assets within their portfolio. Selling those assets to smaller new entrant operators and even private equity groups opens the door for Petrofac to operate those facilities on their behalf. Setting up the service line now will be a real benefit for the future, and we are already in discussions with numerous entities relating to operating their assets.”

JOINING FORCES
Like Adam, Josie Philips is new to the business in Australia and New Zealand, joining last December. “We have the same motivation – make the business a success here, and there are core opportunities vital to both our areas of the business,” she said. “We bring more value when we work together across service lines.”

“No other company in the region has the ability to be the duty holder of an asset through its late life and then begin the decommissioning process through to final plug an abandonment of the wells, so having those service lines side by side makes complete sense. No one else has the capability and track record which Petrofac does in this space,” added Adam.

There are a few opportunities Josie is exploring, including decommissioning opportunities in both New Zealand and Australia, and well engineering and consultancy service opportunities for new entrants and established operators in Australia. Our long history in New Zealand gives us a strong foothold in the region from which to grow the business.

In Australia, it is a relatively high cost environment due to many factors including geographical location, remoteness of many oil and gas fields, and competition for resources with the mining industry. So, Josie is also exploring the potential of lump-sum turnkey contracts for well project delivery to try and introduce more cost certainty for operators.

“We are executing our first lump-sum turnkey project in the UK,” she said. “Our competition here in the wells sphere doesn’t have the capability to take on the same magnitude of financial and supply chain obligations – we are able to because of our scale, global supply chain capability and liquidity.

“We can consider lump-sum turnkey execution models for both delivery of new wells and plug and abandonment of old wells. Onshore is slightly lower risk, as logistics are generally less complex and weather doesn’t have as much of an impact, however the project we are currently executing in the UK is a subsea plug and abandonment campaign in the Central North Sea. This offering, along with our ability to provide integrated services across the asset life cycle, differentiates us in this part of the world where these models are not currently being offered.”

THE HARD YARDS TO SUCCESS
The business is growing organically which takes time and requires the ‘hard yards’, as Adam says. It has also proved difficult to continue to raise the profile of the Petrofac brand during the Covid-19 crisis when the majority of industry networking events and industry conventions such as APPEA are cancelled.

“Very few people here know what the Petrofac capability is,” he added. “If one of the major operators is going out to tender for Operations Services in the UK, we are on the bid list, guaranteed. The problem here is that we are not on the bid list. Many only know us for asset management consultancy.”

Yet, as Adam said at the beginning, the team is making good progress and has now won work across all service lines. As well as providing technical decommissioning support to the New Zealand government, they have extended contracts with INPEX and Santos for asset management services and signed the first O&M Contract in Australia. They are also in negotiations with multiple organisations for Duty Holder Contracts and Operations and Maintenance Contracts that will come to fruition over the coming years.

These first awards are strategic and important first steps in building our Asia Pacific portfolio, and both Adam and Josie are feeling positive about the future.

“What I really enjoy is the trust and autonomy the business has placed on us to execute the regional growth strategy,” said Adam. “The business has supported us all the way and I’m committed to building a sustainable regional business that we can all be proud of within Petrofac.”

You might also like