Interview: New WGPSN CEO sees strong opportunities for growth
Offshore Energy Today spoke with Dave Stewart, the recently appointed CEO of Wood Group PSN (WGPSN), a division of Wood Group, and a provider of brownfield services to the oil and gas industry.
Starting April 2015, Stewart will move into this role from his previous position as UK managing director of WGPSN’s UK operations.
In the interview, Stewart talks about future growth opportunities, challenges ahead, safety and skills issues, and what Wood Group PSN can do to help the oil companies reduce costs.
First of all, congratulations on your new appointment as CEO of WGPSN. Second, are you happy with what you are leaving behind as UK Managing Director of WGPSN?
I am proud of the significant growth Wood Group PSN has accomplished in the UK and of the strong relationships with our customers that are demonstrated by the contract renewals and wins we continue to secure with key clients. In 2014 our North Sea business achieved over $1.5bn, accounting for 40% of Wood Group PSN’s overall revenue. This financial performance can be attributed to developments including the creation of our duty holder business and the acquisition of Pyeroy Ltd 18 months ago which strengthened our capabilities in the areas of late-life asset management and decommissioning, enabled WGPSN to broaden as a business and enhanced the value and innovation we can offer to our clients.
I joined Wood Group 17 years ago and moved into the role of UK Managing Director of Wood Group PSN in 2012. As CEO of the global business, I look forward to stepping into my position in a strong leadership team that is focused on enhancing our offering to clients through continued strategic development built on a foundation of our Core Values.
In the announcement of your appointment, you said you’re looking forward to the new challenge. What are you expectations for WGPSN in 2015?
I look forward to further strengthening and growing WGPSN’s global operations. There are a number of key markets where we are continuing to increase our business including the Middle East, Africa, Australia and the US. These growth prospects will remain a focus as will our strong commitment to our role in helping create a sustainable industry, seeking and providing solutions for our clients that meet their cost challenges and transform how we deliver.
Oil companies worldwide are reducing their investment budgets for 2015, leading to a drop in demand for oilfield services. Investment in new projects in the UK over the next three years (2015-17) was last year forecast at £8.5 billion but this year’s activity survey by OGUK estimates just £3.5 billion. How will you respond to this tough market environment for the oilfield services sector?
In the UK our focus is on the value and solutions we can provide to clients in late-life asset management through to decommissioning. We believe our breadth of services positions us strongly to work collaboratively with operators to understand how we can manage and maintain the existing infrastructure, enhance facilities and develop solutions that maximise productivity and cost efficiency.
Has WGPSN been approached by clients seeking to lower fees of the existing contracts?
WGPSN is working collaboratively with our clients to identify and realise opportunities to control costs and develop sustainable efficiency improvement solutions in order to maintain the long-term health of the industry.
Proactive measures such as the reduction in the rates we pay to contractors are not taken lightly, but we believe they are required in light of the cost and efficiency challenges affecting the oil and gas sector, exacerbated by the fall in oil prices.
What can WGPSN do to help the operators reduce their costs, but at the same time keep its own profit margins healthy?
The breadth of our service line means we can deliver a collaborative, competitive, flexible and efficient offering to our clients globally. Our range of capabilities, including design, construction, operations, maintenance, and now industrial services, allows us to be more flexible ultimately enhancing the value we provide to clients. We embrace innovation; seeking new ways to work more effectively is a significant part of what we do and how we deliver.
Industry peers have so far this year let go thousands of workers due to the fall in demand and as a cost cutting measure. Do you think more of the same will happen in 2015?
We continuously review our resourcing requirements, which are driven by the scope demands of our clients. This is common practice for supply chain companies like us.
While much has been said about what the oil companies and the suppliers need to do in order to weather this low oil prices storm, the unions have warned that no attention has been given to protecting and growing the skills base, which they say is crucial to the industry’s future progress. What is your opinion on that?
It is vital that during these challenging times we do not lose sight of the fact we must safeguard the decades of skills and experience that have built up in the oil and gas sector, and will sustain it long into the future. Developing the most effective and efficient operating environment will go some way to ensuring the sector is even stronger and more internationally competitive in the future.
Also, what do you think about Unite’s warning that jobs cuts across the industry are placing enormous pressure on the remaining workforce, thus compromising safety?
Safety and assurance is our top priority and integral to how we do business. Our focus is on assuring the safety of our people and everything we design, construct, operate and maintain, while taking measures to improve efficiency and reduce cost for our customers and safeguarding the future of our industry.
As an industry we must commit to understanding how we better utilise the strong skills base we have offshore and these challenging times should be treated as an opportunity to do so. For example, I believe embedding fairness and equality across the sector through the implementation of equal time rotas would increase morale and collaboration among clients and the workforce.
With your new role, you are now expanding your focus from the North Sea to the global market. Where do you see growth prospects for WGPSN?
Seeking new markets and acquisitions globally forms a key part of our strategy and we see strong opportunities for growth in Africa, Asia and the Middle East. In addition our focus remains on enhancing prospects in the US where we are positioned well to continue growth in the onshore shale market and in the Australian brownfield market, both onshore and offshore.
On the other side, what are the potential threats for the business in the year ahead?
The fall in oil price and demand represents a significant challenge to the industry. However this is a resilient and resourceful sector and if we work together collaboratively and creatively to embed long-term changes, we can sustain its health and ensure we come out of this downturn stronger than ever.