LONDON—It is a tough marketplace out there in the subsea world with a limited number of new projects coming forward to keep business ticking over. So how do companies survive this prolonged downturn while waiting and hoping for the long-expected upturn?
Companies like umbilical and power cable specialist Nexans stay focused on high “value-added” contracts, while keeping regular and frame agreement customers happy. With hindsight, an added benefit is not getting sucked into the competitive cycle that sent some manufacturing companies into a frenzy building new plants around the world while the market overheated. Some likely now find themselves with overcapacity.
However, the umbilical division of Nexans, inside the high-voltage group, has an advantage over some of its competitors. At 18%, the division is a relatively small part of the much bigger cable manufacturing parent. The umbilical and power cable business could be sheltered from the worst of the downturn.
For the most part, the Norwegian-based division continues to focus its main umbilical and direct electric heating cable manufacturing at its Halden plant in southern Norway with its deepwater quay, which allows it to load product onto as many as four vessels at a single time. While the division has shifted some manufacturing of shorter length umbilicals—typically for workover and ROVs—and components to its northerly facility at Rognan, it continues to keep key engineering workforce close to its primary winding machinery and extrusion tower down south.
While Nexans’ competitors built new facilities in the Far East, West Africa and Brazil, the company kept its powder dry. The move looks like it was a wise decision. Business is always a trade-off between risk and reward. It is possible to reap big rewards from taking risks and following the market, but it can hurt when things go sour.
Not being directly in some of these markets has not necessarily hurt Nexans. The company has secured three contracts in Brazil and several in Nigeria. But the company is not ignoring the “local content” issue. Nexans is looking at making components in Nigeria and shipping them to Norway for umbilical assembly.
Big business is elsewhere and usually for more complex products. A recent subcontract through OneSubsea for Woodside’s Greater Enfield development includes a 32-km (20-mile) combined umbilical and power cable that will feed a seabed pumping system in 915 m (3,002 ft) of water. The contract also includes its new SUTAFLEX modular umbilical termination assembly, which is smaller and lighter (1.5 t) than similar systems in the market and can still handle up to 20 electric and 32 hydraulic connectors.
Its two biggest customers, though, are BP and Statoil. Nexans already has supplied equipment for Phase 1 of BP’s giant Shah Deniz gas development in the Caspian Sea. Phase 2, with delivery set for early 2018, features 100 km (62 miles) of umbilicals and one of the industry’s biggest direct electric heating applications. It also is supplying 100 km of umbilicals for BP’s upcoming Fayoum-Giza-Raven deepwater gas fields offshore Egypt, which are part of Phase 2 of the West Nile Delta complex—a key development for filling Egypt’s domestic gas requirements. This order follows on from the 47 km (29 miles) of umbilicals provided for two earlier gas projects, Taurus-Libra.
Nexans also has already supplied steel-tubed umbilicals for five Statoil projects under a new “standardized” design frame agreement. The supplier, the first to offer a steel tube umbilicals design more than two decades ago, has challenged the notion of what “standardized” means by focusing on components, while allowing designs to meet field requirements.
Under the highly engineered banner, the company supplied umbilicals and other elements for the Asgard subsea compression system, now in the water for more than a year.
The company’s third market focus is the Gulf of Mexico where the company has delivered the umbilical and power cables for Chevron’s big Jack/St Malo floater development, which will feature seabed pumping in phases two and three of the project. The company also delivered its deepest dynamic umbilical—at 2,350 m (7,710 ft)—for BP’s Na Kika project.
—Steve Sasanow
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