Fleet-footed Bourbon hoists sail for wider horizons
  from: Offshore Engineer
  by: Darius Snieckus
  Tuesday, July 08, 2008

Paris-headquartered Bourbon earlier this year added extra financial muscle to its strategic Euro2 billion plans to enlarge its share of the ‘modern offshore oil and gas services’ market by building on an already ambitious programme of fleet, equipment and technology investment, and recruitment and training. Darius Snieckus gets a progress report from chief executive Jacques de Chateauvieux.

Bourbon’s corporate motto might well be ‘There is no time like the present’, to judge by a timeline of the group’s 60 year history.

Established in 1948 through the merger of several family-run companies on the French Indian Ocean island of Réunion with the intention of rebuilding the region’s sugar industry after the Second World War, Bourbon went through a series of incarnations before branching into the marine sector in 1992, and selling off its milk and fruit juice businesses after 2000 to focus on offshore supply services.

Since then the group has grown unimpeded, taking over Norway’s Havila Supply in 2002, moving into the Brazilian and West African markets in 2003, and, in 2005, underlining its evolving internationalism by transferring its headquarters to Paris. In March this year, Bourbon reported operating income up 26.4% to Euro309.7 million, with its offshore division contributing revenues of Euro484.5 million, up 21.9% year-on-year.

Fleet-footed as Bourbon is, the offshore oil and gas industry has been moving at an unprecedented pace in the last two years fuelled by record crude prices and ramped up exploration activity. In February, persuaded that ‘oil and gas investments are expected to be higher than initial estimates [in 2005] and that growth has been slowed by bottlenecks at equipment suppliers [and that] as a result, investments are expected to be spread out over time and generate a positive extension of the production cycle’, the group retooled its two-year-old Horizon 2010 strategy backed by a further Euro1.7 billion to be chiefly spent on new vessels and ROVs that will close to double its 237-strong fleet.

Horizon 2012, as the ‘extended’ strategy is known, has equally expansive objectives, namely to increase total revenues by 17%/yr – founded on income from offshore work growing by an average 21%/yr – so as to reach a return on capital employed of 18% inside five years. Central to the revised plan is a reorganisation of its offshore division into ‘marine’ and ‘subsea’ services, with engineering & management, IMR vessels, and ROV services coming under the latter.

‘The key difference in perspective between Horizon 2010 and Horizon 2012 has to do with the extension of what we believe to be a favourable cycle in the offshore sector for us,’ states Bourbon chief executive Jacques de Chateauvieux. ‘And this extension is the result of a number of phenomena, including the oil industry’s continued search to find new reserves – and the accompanying growth in expenditure on exploration – which has resulted in equipment and personnel constraints in the contracting sector and an occasional mismatch between supply and demand in the marketplace. So really the changes in demand in the offshore industry that have happened in the two years between launching Horizons 2010 and 2012 meant that we had to change our outlook as to the longer-term potential of the sector for us.’

Glossing this fast-evolving market reality, he notes, is the oil industry’s relentless drive into ever deeper waters, and its simultaneous determination to increase recovery from what de Chateauvieux refers to as ‘classic offshore’ developments around the world, all of which has given greater currency to subsea technologies and services.

The backbone of Bourbon’s revised Horizon strategy is mass investment in its fleet. All-in, within the framework of the Horizon 2012 strategic plan the company has 188 units on order or under construction – 100 offshore supply boats, 19 inspection, maintenance and repair vessels, and 69 crewboats – along with a quartet of newbuild ROVs that will be added to its offering. Twenty-four PSV and 54 AHTS new generation GPA design vessels, diesel-electric powered DP2 units adaptable to deep and shallow-water assignments and ‘equipped with the very latest technologies’, will be delivered to Bourbon from various yards over the coming three years.

These will be joined by a series of four 4400dwt Ulstein PX105 supply vessels, featuring the innovative X-Bow inverted bow, PG-Macs (multi application cargo solution) systems, which increase hold storage capacities and offer tank versatility, and carry the DNV ‘Clean design’ certification for quality, environment and comfort. To round out the fleet, Bourbon has also ordered ten GPA 696 design IMR vessels from the China’s Sinopacific shipyard.

‘After the classic offshore era has come the era of deepwater, and we see the next wave being that of the inspection, maintenance and repair of the deepwater equipment and installations,’ he states. ‘But where in the past the oil companies approached ROV suppliers for their ROVs, shipbuilders for the AHTS, IMR and supply vessels they needed, and engineering consultancies for engineering services, we feel these operators are now responding to the offer of a global contractor such as Bourbon that can orchestrate the whole business – engineering, management, vessels and ROVs – under one banner.We feel with this investment we will be able to offer the complete palette of equipment and services.’

Local time

Deepwater and subsea developments being the primum mobile for present day offshore markets, it will come as no surprise to hear that Bourbon is keen to expand its presence off West Africa. Though already working for operators including ExxonMobil, Total and Chevron off Angola and Nigeria, the region is seen as a prime hunting ground, with the waters off Gabon, Equatorial Guinea and the Democratic Republic of Congo all in the crosshairs. ‘Our presence off West Africa is a strong one and we expect it to remain a region that represents a strong revenue stream – at this moment some 65% of our revenue comes from these activities,’ states de Chateauvieux. ‘It is also a region where we have been able to build up strong local partnerships which have allowed us to integrate well and ensure that we meet NOC local content requirements.’

The other ‘zone’ crucial to Bourbon’s expansion plans is Southeast Asia and the Indian sub-continent, through for quite different reasons, not least that the vessels traditionally at work in these regions make up a large percentage of the supply boats that would be retired were it not for the construction constraints in the major shipyards.

‘The existing fleet of vessels in this market is old and requires maintenance more and more,’ underlines de Chateauvieux. ‘By 2010, of the existing fleet of continental offshore vessels, 300 supply vessels will be over 30 years old and more than 700 will be between 20 and 30 years old, but the rapid replacement of this fleet is hampered by the bottleneck that we are now seeing in shipyards.’

‘Oil companies today want vessels that are high technology and high capacity and in many cases suited to deepwater developments, of which there are more and more in Southeast Asia. ‘Through our Singapore offices we are moving to have the same type of offering and modus operandi here as we have in Africa, that is to say, one based on local partners and, along with the established relationships with the oil majors that know us from elsewhere in the world, one based on new relationships with the area’s NOCs.’ He cites ongoing assignments with India’s ONGC and Indonesia’s Petronas as examples of the new model contracts Bourbon is now aiming to build on with its new-look supply and support fleet.

At the same time, Bourbon is retrenching its place in the North Sea, Gulf of Mexico, offshore Brazil, and in the Mediterranean and offshore Middle East in the role of ‘redevelopment’ contractor, while responding to changing demands from national oil concerns such as Saudi Aramco which are looking for replacements for their ‘ageing and low-tech’ support fleets.

If new vessels are the backbone of the repositioned Bourbon, the brains will come from the nearly 4500 new employees that are to be hired by the group by 2012, a doubling of its current workforce, as it rises to meet ‘an unprecedented recruitment challenge’. To answer a skills shortage that continues to impact on the offshore industry at large, Bourbon has set up ‘crew sourcing centres’ in the Philippines and Singapore to bolster its European recruitment efforts, and, beyond this, the group in the last year has set up a new dynamic positioning training facility in Manila and one specialising in anchor handling operations in Marseille, France, to skill-up new recruits and inculcate in them the ‘Bourbon culture’. The ribbon will be cut on a new Bourbon training centre in Singapore at the end of 2008.

‘These facilities will give both our oldest and newest employees quality training, in complete safety, under real conditions, so that they are imbued every day with the high operational, quality and safety standards and the values which determine and will determine the success of Bourbon,’ offers de Chateauvieux. ‘This is all part of our strategy to “industrialise” maintenance operations and training in order to bring costs down as far as possible.’

Since launching Horizon 2012, growth buoyed by ‘strong activity by oil companies which should continue over time’ has continued apace. Revenues for the offshore division in 1Q 2008 climbed 23.4% year-onyear to Euro136.8 million, supported by assignments for newly-commissioned vessels, contract renewals, and the ‘increase in vessels chartered from third parties to meet the needs of [Bourbon] customers’. Seven crewboats and nine new supply vessels were sailed out over the quarter, with a larger number of newbuilds expected to enter service over the course of the year.

‘For the moment, so long as we stick to doing what we said we would do [through Horizon 2012] – notably the training, the standards of operation, the quality of our vessels and so on – the future looks bright. We are thinking of the long-term and to do this we must ensure that, in the final analysis, our clients, the oil companies, have confidence in us in the long-term,’ concludes de Chateauvieux.

‘And that is why we have developed a strategy in Horizon 2012 that looks far beyond making a return on supporting the drilling of an exploration well here and there – we want to commit to life-of-field and the necessary services and personnel and vessels that we can provide in the years ahead.’OE

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