Subsea 7 is ready for market recovery
Providing seabed-to-surface engineering and construction services to the global offshore energy industry, Subsea 7 is a major player. Talking about how the company has fared during the industry downturn, Head of Contracts Offshore Resources John Lambert points to numerous factors that have ensured that Subsea 7 is ready for an upturn in the market. These have included strategic decisions concerning personnel, technology and the maintenance and growth of the fleet.
How has Subsea 7 been affected by the current situation facing the offshore industry?
I think that, in general, we have probably suffered the same as anybody else in the industry has. Unfortunately this has always been part and parcel of the offshore sector – this is a cyclic industry. The important point is that we have ‘right-sized’ the company for the future.
So is Subsea 7 ready for market recovery?
We still have lots of expertise and experience within the company, so we are well-positioned to cope with the upturn when it gets back in full swing. Yes, we have seen a lot of charter vessels leave our fleet, as well as one or two of our older vessels, but at the same time we have brought six new vessels into service during this period. These new assets have made us stronger and more capable than we were before the downturn.
How much does technology contribute to this preparedness?
As well as being an installation contractor, we have extensive in-house engineering. We develop subsea technologies on a daily basis. We are absolutely at the forefront of subsea technology and that is where we intend to remain. This also entails cooperation with other leading players. With Huisman, for example, on the subject of crane design.
How important has the maintenance and repair of the Subsea 7 fleet been in the current situation?
In an industry downturn you are very conscious of cost constraints and budgets. However, when you operate a fleet of vessels, you have a requirement to keep them in the best condition you possibly can. They have to be kept in class, fully serviceable and up-to-date to stay competitive. What’s more, it would be a rare event if a particular vessel would not have to be modified in some way or another to make it project-specific.
Has Damen Shiprepair & Conversion been involved with this?
Undoubtedly. We have built up a strong relationship over the last 5 years. I am not ashamed to say that we are a very demanding client, but Damen satisfies our requirements. The biggest driver for us is safety – and Damen have proved themselves to be safe time and time again. And, in terms of timing, I cannot recall any of our vessels docked at a Damen yard that have not been delivered in line with the contractual requirements. They perform and deliver on time.
Looking forward towards the emerging decommissioning market, would you say that Subsea 7 already has its foot in the door in terms of experience and equipment?
Absolutely. We have extensive lift capacity within the fleet. Seven Borealis, for example, has a 5,000-tonnes lifting capacity, and our new heavy construction vessel, Seven Arctic, can lift 1,000 tonnes. This is backed up by our joint venture company Seaway Heavy Lifting with the Stanislav Yudin and Oleg Strashnov and their respective lifting capacities of 2,500 and 5,000 tonnes. And, with more than twenty projects completed to date, our experience in decommissioning subsea elements is growing all the time.
And finally, the question that is on everybody’s minds.
When is the market going to recover?
There is a consensus within the industry that we’ve hit the bottom of the cycle. And while it is not unbounded, there is certainly more optimism in the offshore sector than there was a year ago. We believe 2016 will represent the low point of the cycle for project
investment decisions with a gradual recovery in projects sanctioned in 2017 and a positive trend thereafter. Subsea Umbilicals, Risers and Flowlines (SURF) awards to the market are expected to follow as more projects are sanctioned, with construction activity offshore typically commencing 12 to 18 months after a project is awarded.