Offshore Engineering Industry Will Move Towards Highly International Integration

Reporter Zhang Xianghui

Reasonable oil price is an important condition to support the offshore oil development. But since June 2014, global oil price crashed,which had rarely been seen in history, and led to owners’order cancellation successively or charterer “is hard to find” in global important offshore engineering markets such as Brazil, the North Sea, the United States, Mexico,China and other countries. More risks are facing the offshore engineering industry. As for Chinese enterprises which are the “new generation” of offshore engineering field, how to realize the development in the depressed market and reach new height? With these questions, the reporter interviewed Yu Ya, the vice President of CIMC Group and the President of Yantai CIMC RAFFLES.

Reporter: The global oil market suffered “Waterloo”,which discouraged shipowners and oil companies,and some offshore engineering enterprises have also been “implicated” as orders were cancelled, what do you think about the present situation?

Yu Ya: At present, it is undoubtedly winter for offshore engineering market and industrial risk is significantly increased. Although “winter” has come, the market demand is still there. Owners delay orders or wait and see. Once the owner has demand and places an order,how will the shipyard complete a construction of high quality and make up the lag and delay before in a short period of time? It has put forwards higher requirements for enterprises on-time delivery. At the same time, when investment decision is made more prudently, the owners are more likely to choose the high-quality goods which have the cost advantage.

Reporter: What are the factors determining the value of the offshore engineering unit?

Yu Ya: Firstly, the unit supports ship owners to obtain the lease with good cost performance and cope with the challenges of the current low rents with comprehensive cost advantage. Secondly, the unit provides value for ship owner with good quality. Good units can have a good performance after 10 years or 20 years and the residual value is more than expected. Enterprise should think how to make the unit have good value performance in the whole life cycle.

Reporter: How large influence the drop of oil prices have on Raffles?

Yu Ya: The drop of oil prices has certain impact on all enterprises of the oil and gas industry chain, including us. But the construction cycle of semi-submersible unit is long so that we have continuous orders. We are more concerned of the oil prices expected in 2017 and 2018. Currently, the oil prices have made the offshore engineering industry enter the profound adjustment period and “the knockout stage”. After adjustment,industry structure and business orientation will have a big change, and enterprises with high quality production will be multiplied.

Reporter: The company undertakes a lot of orders from Norway’s North Sea, what is the experience for meeting Norway rules and standard?

Yu Ya: The standards of Norway’s North Sea are very high, which pay more attention to environment and“people-oriented”. To fully understand, digest and absorb the connotation of the rules and standards. People often say “attitude is everything”, which is true exactly. For us, quality comes first, and it is not only a concept and attitude, but also continuous accumulation and input.

Reporter: Could you give an example?

Yu Ya: COSL Prospector which was delivered in November 2014 with DNV and CCS dual-class certificates has 850,000 meters of cable, which all adopt high standard wiring noses, equipped with special tools for connection. Cable, pliers and wiring nose must correspond to each other and must be accurate in place.On this unit, there are 200,000 cable marks which is not a small number.

Reporter: What are the decisive factors for the high-quality goods?

Yu Ya: For offshore engineering industry, from the whole chain including the design, procurement and production, the design level and technology guarantee is the basis of high quality, also including project management ability and experience. If the overall understanding is not enough, it doesn’t work only by local breakthrough. After a few years’ accumulation and breakthrough of technology, now we also reap the benefits of basic design.

Reporter: At present, seven offshore engineering enterprises of Shandong establish industrial union,and what is its goal?

Yu Ya: Offshore engineering industry is a long industry chain, which needs a complete set of supporting. Seven companies are the leading domestic enterprises and the full resources configuration is realized. In the end, it is not only one enterprise which meets European standards, but a group of enterprises which meet European standards, and then hundreds of companies are up to standards, thus the effect of industrial cluster is to emerge.

Reporter: What about offshore industry’s future development trend?

Yu Ya: Building a powerful offshore engineering industry won’t happen overnight. In the future, it will be highly internationalized industry integration, global allocation of resources. Regional color will be no longer outstanding,and there will be no absolute boundaries. Europe has design and equipment advantages, and China has building and supporting advantages. Building and construction experience give feedback to design while design guides construction, blending more and more together and realizing cycled optimization. Chinese enterprises’ global position will be more and more important.

At present, the key for our development is opening up and innovation, speeding up the promotion of design and matching ability, in order to realize growth and integration with the international market. Of course, in the process, hard work and effort cannot be lacked.