Asian opportunities, local content and learning from other industries
Perth’s position on the world map puts it on the same timeline as 1.7 billion people, or roughly a quarter of the world’s population, many businesses are flocking to the city to be a part of this rapidly part of the world.
“The nice thing about Perth is that it's a gateway to Asia so it's a great place to set up a regional hub to tap into the oil and gas industry and in Western Australia itself but then also continue to expand into the region,” said Mike Deeks at a recent energy business networking event held in Aberdeen ahead of his presentation at AOG 2019.
A gateway to Asia
While this relative closeness to Asia is seen to give Perth its competitive advantage in developing the city into a regional service hub, for Neil Gordon, Chief Executive Officer, Subsea UK says that it could also open the door for competition.
“Australia is a big country. The North West Shelf is over 1,200 kilometers away from Perth which is almost the same as the length of the UK.
“While this distance is far shorter than say Malaysia to the North West Shelf, distance becomes less of a barrier if the cost of doing business in Perth proves to be uneconomical,” said the CEO.
For Gordon, positioning Perth as an attractive destination for investment needs to be a partnership between the industry and Government. Citing that early adopters will bring their skills and experience to Australia who in turn will transfer that bank of knowledge to people based locally, while in turn helping to grow the local economy.
If the conditions for entry are too steep, then WA risks losing those experts who would have mentored the next generation of Australian workers in the oil and gas sector.
For Jan Ove Urheim - AOG’s Norwegian Agent - the focus should not be on local content alone.
“Both Scotland and Norway are small countries, with limited human resources. This year marks my 11th consecutive year in Perth for AOG, and the vast majority of Norwegian companies and subsidiaries on display have no Norwegians working at their office.
“It is the same way as how we built our shipping and seafood export industries. We sent one or two managers to a given destination. They recruited the best local talent, sent them back to Norway, and after some time they ended up running the operation.”
Recent examples such as in Brazil where well-meaning local content rules, which force oil producers to buy from domestic supplier’s wind up creating an additional tax that also creates bottlenecks that delayed the development of a robust local industry with most companies opting to pay high fines to speed up production.
“Local content must never be a goal itself. Building, selling and using the best products must always be the objective. The rest will even out over time,” continued Jan.
A strategic opportunity
Neil sees WA’s unique mix of vast resources, great distance and modest population as a strategic opportunity for the State to borrow from other industries to develop innovative products and services.
“Just because people have done it in the past does not mean that we need to do it the same way in the future. The natural landscape, size and remoteness of projects in WA present many challenges, but they also present opportunities to do things in a different way,” said Gordan.
Much in the same way that mining companies are building trucks that can be driven from an operations centre in the city, Neil imagines a future where oil and gas operations are monitored and maintained from centrally located hubs, saving companies vast sums of money, while also seeing gains in the area of safety.
Neil’s Norwegian counterpart agrees, reminiscing on a story about a pair of Venezuelans he met in Stavanger 25 Year ago.
“They were there to learn about logging and horizontal drilling. One said to me, ‘we have been in the oil business for a century and Norway only 20, yet we are coming to you to learn.’
“By having a less mature business, you look at the industry with new eyes and without the legacy tradition and given truths. There will always be an approach to a problem, having deep expertise from another field is just a benefit. Australia has mining, Norway had shipping," summed up Jan.