Petrofac

Source: Energy Digital

Date :06/05/2008 17:29:05

When Petrofac was featured in Exec in March 2007, it was preparing to start a major project in Dubai. Paddy Mallan provides an update on Petrofac’s progress

Written by Lucy Mowatt and Produced by Alex Smith

By restructuring the business and relocating its people, Petrofac has sought to meet market demand more effectively in the past year. As a result of these changes, Paddy Mallan has become the Vice President of Integrated Resources and has relocated to the company’s base in Sharjah, UAE.

He explains that although he has relocated to Dubai, he still oversees business in the UK. The company’s Sharjah base is simply better positioned to take advantage of opportunities in new markets. “Our desire is to grow the business quite significantly globally,” he says of the move. The new office will also allow Petrofac to stay in close contact with one of its major clients, Dubai Petroleum Establishment (DPE).

The contract with DPE, which will see Petrofac run and maintain 70 platforms on behalf of the company owned by the government in Dubai, is “unique” and will last for as long as there is oil to be extracted. As such, Integrated Resources, whose main service line is the provision of highly skilled, competent personnel to the oil and gas industry, is ideally placed in Sharjah.

“It’s the first time that the government here has contracted with a non-oil company to provide operations and maintenance for the assets that they own and the reserves that they have, as well as produce,” Mallan says. Although this is the first contract of its kind, Petrofac is certain there will opportunities for similar contracts with other NOCs (National Oil Companies) in future.

“It may not take the form of the relationship we have with DPE, it may be a different version, but there’s definitely a desire [to look at outsourcing] as oil & gas companies have got $100-barrel oil... [Traditionally] national governments around the world have had production share agreements with operating companies and we think that Petrofac is well placed with its experience to break that mould,” Mallan continues.

Legislative considerations

Because Petrofac’s employees are all highly trained and aware of the standards required of them, the company is also well placed to meet regulations in new regions. Speaking of the situation in Dubai, Mallan says: “We applied our own standards, which are in excess of any of the basic regulatory requirements... we’re bringing in a different set of standards and our own performance, particularly in health, safety and environment requirements.

“It is difficult to persuade people that there are benefits to be had from applying our standards, which have intangible benefits at times, but are very tangible when you’ve avoided incidents and accidents.”

With a record of operating safely and efficiently, Petrofac has gained a good reputation within the oil and gas industry. “We rely on that to give us opportunities; people come and talk to us,” Mallan states. Although the company does work hard to build a brand, it believes that operating responsibly is the best reputation it can have.

Meeting industry demands

A variety of factors can influence the oil and gas industry and, as such, Petrofac is continuously looking for innovative methods of oil extraction, maintenance and decommissioning which are both cost-effective and viable. Integrated Resources are able to provide optimum staffing solutions to deal with any changes required.

“What you find is that clients’ needs change - they change when the oil price changes, when interest rates change and when they bring forward new contracts,” Mallan says. These changes will inevitably have an impact on operational companies, such as Petrofac, so that budgets or deadlines can be met. The solution, he says, is that “you have to be able to adjust and be able to blow with the wind, meet their needs and come up with ways of doing things they didn’t think of.”

And Petrofac certainly does that. However, Mallan points out that clients are often resistant to new ideas, in spite of seeking Petrofac’s advice. “If we’re pushy and push them into things then we’re viewed as arrogant, so we’ve got to work our relationship with the client, encouraging them to ask the right questions, so we can give them a range of options; then it quite rightly becomes his idea, because he’s paying the wages and at the end of the day he’s also paying for the service.

“We do not have a silver bullet. What we have got, however, is a menu of things that we are currently using with some clients in different phases of their life cycle. In amongst all that, there are combinations of things that are the right answer.”

Investing in education

Consequently, it is easy to see that the Integrated Resources division has a substantial number of renewed and continuing contracts for personnel. Mallan says that Petrofac can offer the service that customers want, to the standards required while continuously improving. “We have, on record, made improvements in some key areas; safety, production, cost, efficiency and effectiveness. In every instance we have an excellent track record.”

Achieving these goals, however, is dependent upon people, Integrated Resources’ main asset. As Mallan explained in March 2007, the oil and gas industry is lacking the skilled employees needed to make the most of current oil prices. This situation, so far, has not changed, he confirms.

However, Petrofac Training can overcome these shortages. A number of Petrofac Training sites have been established around the world, funded by clients such as BP and run according to their particular needs.

“What we are advocating, through Petrofac Training, is the establishment of industry specific training centres around the world to ensure that we bring in competent and capable people. We want to enhance their skills, allowing them to be significant contributors to the industry, whilst sustaining the industry and meeting the targets that have been asked of us.”

Mallan goes on to state that oil and gas companies need to recognise their responsibilities in order to safeguard the industry’s future; investments should be made in people while the price of oil is high. He also explains that, in the longer term, cross pollination should take place which will ensure that there are engineers available to work in all areas of the energy market.

“The oil and gas industry does a fantastic job at attracting people into its own companies, which is great, but it has a much larger portfolio of relationships with contractors and suppliers... and it’s not creating opportunities for us to invest truly collectively as an industry,” he continues.

Mallan is passionate about training because he is a prime example of how successful cross training can be: “I served my time as a marine engineer in the Royal Navy and I’ve been in the industry for 30-31 years now - from being just a low-down technician to being a vice president.”

With one eye constantly trained on the market, the creation of a resource pool for the future and profile-building in international markets, Paddy Mallan certainly has a busy year ahead of him.

Click here to view the corporate brochure on Petrofac