IRO chief sees good year ahead for Dutch service/supply sector

World Oil, April, 2002

Gert-Jan Kramer

Gert-Jan Kramer, President and CEO of the Fugro Group, also serves as chairman of IRO, the Association of Dutch Suppliers in the Oil and Gas Industry. Recently, he spoke to World Oil about the factors that lead him to feel optimistic about the 2002 market.

Q: Please describe IRO current role in the Netherlands upstream industry.

A: There is not much difference from last year. It is helping Dutch companies' export endeavors, keeping the Dutch local market organized so that we can work as efficiently as possible. Political contacts are also maintained.

Q: What are some initiatives or projects that IRO participates in to help Dutch companies worldwide?

A: Trade shows like OTC, Offshore Europe in Aberdeen and ONS in Norway are one thing, obviously. Also, export platforms, where we have a group of companies who work together and assemble a group tender for a project required by an oil or gas company. We also gather information on market developments that individual companies--certainly the smaller ones--can't get (on their own).

Q: What are sonic major projects, either in the North Sea or other regions, that Dutch companies are involved in?

A: In contracting and construction, the Dutch group IHC Caland has a very big market share in FPSOs and FSOs. Then we have, of course, the Hereema Group in lifting and installing platforms. There is also the Allseas Group for laying pipelines. All of these companies operate worldwide, so it doesn't matter whether the work is in the Gulf of Mexico, West Africa or the Philippines. On the consulting side, there is my own company, Fugro, with 7,000 people doing all kinds of soil investigation and survey activities.

I think that if there is any FPSO out for tender, then IHC Caland should be involved. If there is any foundation problem, then Fugro should be involved. If there is a very heavy platform to be installed, then our industry should be involved. None of us has 100% market share, but we are allowed to tender, and we do get a lot of work.

Q: Does any one project stand out as a good example of a major project that Dutch companies are involved in?

A: In the Philippines, Malampaya was quite challenging. All the deepwater work in the Gulf of Mexico, West Africa and the like is another good example of Dutch participation. I cannot mention additional individual projects now, because we must have client approvals before one does that.

Q: Have sonic recent projects focused on important Dutch technology or support developments?

A: Reservoir characterization software is spread widely via Fugro's Jason company in Rotterdam--for reservoir engineering and prediction of future production. It is a pretty unique piece that exists. Another focus is the whole extension to 3,000-in water depths, whether it is FPSOs or just straight soil investigation, as my company does, and looking at the geophysical top layers--this is very important and unique. Also, what can I (attach) to, or build on, a seafloor in 2,000 to 3,000 in of water? These are pretty unique things. As far as I know, we have been doing soil investigations for pipelines, already, at 2,700 m (8,859 ft). That's a hell of a distance down--almost two miles!

Q: Are these capabilities important to new international projects?

A: Yes, they are very important. Oil companies are looking for bigger fields in deep water, because large fields in shallower waters have been identified already. So, these modem technologies are extremely important to help our clients in what they want to do.

Q: How did 2001 stack up for the Netherlands?

A: Actually, it was quite good. But again, the whole economy here was quite good. A lot of companies provide services in oil and gas, but also in non-oil-and-gas-related products. So, it's a mixed share, always. The Dutch territorial waters and the onshore were reasonably active. Gas prices here have not "perceived" the low value that you give it in the States.

I underline "perceived," because it was only two years ago that $2/Mcf for gas was quite a good price, and now it is quite a bad price in the U.S., and one wonders why. The answer is probably that some people got a smell of $6 or $7 gas prices, which was considered totally impossible four years ago. It also has to do with marginal fields that need a higher income, but $2 for gas was not a bad price, not that long ago.

Q: Given your opinion of last year, what do you expect for this year?

A: You have to split the U.S. gas market from the rest of the world. In my personal view, the U.S. gas market should improve in the not-too-distant future. This means that activity should improve--someone has to start drilling for gas eventually. In the rest of the world, the oil and non-U.S. gas sectors seem to be headed for--at least from the plans of oil companies that have been revealed--a higher investment level of up to 10% in 2002 versus 2001. This doesn't surprise me, because these huge deepwater fields cost a lot of money. They get a lot of oil and gas, but they do cost a lot of money. So, I expect to feel positive about 2002--that's assuming we don't get a collapse, which is always possible (although certainly not likely).