Odfjell Well Services is a global player within the upstream oilfield service sector, providing tubular running services, drilling tool rental and well intervention services. The company has been present in Romania since 2009.
Can you briefly introduce Odfjell Well Services since your arrival in Romania and your current capabilities?
The company has been operating in Romania since 2009 but the local entity has been set up a few years later, in 2012. We are presently going through a period of growth and just recently surpassed 50 employees.
From here we coordinate the larger area of Central and South Eastern Europe. It is no coincidence that we chose Romania as a regional hub - we managed to have a very good start in this market and we were able to put together a very strong team. Romania’s long tradition in oil and gas brings the advantage that it is easier to find skilled people than in other places and this is key for our business. We tend to share resources between the different countries in which the Group operates, for instance many Romanians have participated in projects in the North Sea.
How important is Romania to Odfjell Well Services’ wider business, given the recent diversification in the region?
Back in 2013 about 90% of our business was coming from Romania. However, we were very dependent on one or two very large operators which were generating the majority of our revenue. For the stability of our business we started shifting our focus towards new jurisdictions. Presently about 60% of our business comes from Romania, whereas the remaining 40% comes from other countries in the region.
This regional expansion has become very important for us, we have in fact put together a new geo-market as part of our Group’s strategy. We have just added Ukraine to our portfolio and starting out we will provide services sourced from Romania, but the plan is to open an entity there as well in the coming years. The situation is similar in countries like Turkey and Greece, and generally we keep an eye out for market developments to understand what makes most sense in terms of expansion going forward.
You mentioned that the company is going through a period of growth in Romania. What has been driving this positive trend?
Through the nature of our activity we grow or slow down according to how the industry overall is performing. In other words, our volumes are directly impacted by the development plans undertaken by operators. There is demand in the market currently, mostly generated by operators’ efforts to maintain their production levels, and the stabilization of the oil price has also made a positive contribution.
Although it is a competitive market, our activity has been rather constant in Romania for onshore, and the offshore sector keeps gaining traction. We are for example working on the first project that has received the final investment decision, and we are waiting for other key players to present their decisions in the coming period.
Odfjell’s core expertize is in the offshore sector, especially deep waters and harsh environments. Does the Black Sea raise any particular challenges in terms of drilling?
We are indeed mostly focused offshore, but in Romania the onshore segment has seen much more developments in the past so we had to adjust to this circumstance. The offshore sector is just beginning to grow, companies tend to come and go, so there have not yet been any campaigns that could ensure long term agreements.
Regarding the Black Sea environment we do not find it particularly challenging. There are deep water projects which require a particular type of technology, but there are also shallow and medium water type projects where classic equipment suffices. We can easily serve all these types of projects through the capabilities that we hold within the company.
What are your key milestones for the next two to three years?
We firstly want to maintain our portfolio, hopefully also solidify it. There are some new challenges to adapt to, for instance one of our main customers is now required to go through a public procurement process. This adds to the transparency but makes things more difficult for companies like us. As mentioned, we are also very interested to take on more work in the Black Sea.
Apart from this we are very focused on technology, in fact we have consistently introduced new technologies and services in Romania. Recently we made a significant investment in a new facility which will bring over even more innovations, and we expect it to go live in the coming few weeks.
Do you have a final message for investors eyeing the Romanian market?
Romania has an incredible tradition in oil and gas and there are many positive aspects to be found here. Challenges tend to come and go and I am optimistic that the country will see a good evolution in the coming years. Aside from the offshore discoveries, there is still significant potential left in deep onshore projects that has not been tapped into yet.
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