Nawal Saigal says the yard's project portfolio is widening in scope
Nawal Saigal, managing director of Drydocks World Dubai says upstream conversion work is booming and more offshore work is in the pipeline
Drydocks World – Dubai is one of the most prolific shipyards in operation. The shipyard is the largest facility in the Middle East and is the flagship company of Dubai World subsidiary Drydocks World. A ship repair yard of choice, it is also a preferred location for vessel conversions, new building and, increasingly, offshore oil and gas construction.
The facility handles around 400 vessels in a typical year, most of them ULCCs (Ultra Large Crude Carriers) and VLCCs (Very Large Crude Carriers). It completed 25 years of operation in 2008.
Several of the world’s largest dredgers and jack-up rigs are serviced every year and the yard has specialised LNG handling capabilities. Among the yard’s numerous claims to fame is the conversion work carried out on the Knock Nevis, the world’s largest crude carrier, and by most measurements, still the world’s largest ship.
Sitting at the helm of the Dubai operation is managing director Nawal Saigal. In a year when most comparable yards around the world have seen the order book wither away, an upbeat Saigal says the hype of the economic crisis has surprised him to an extent.
“People keep talking about the world being a different place, but I’m a firm believer that if you have a stable business plan then you are ready to deal with the troughs as well as ride the peaks. Business has not stopped, it may have slowed down, but it’s not ground to a halt. If you are good you still get your share.”
The Dubai yard is testament to this fact. The yard may not be at full capacity, but is currently executing five huge conversion jobs including two floating storage and offloading vessels, one floating production, storage and offloading vessel and a landmark floating storage and regasification unit, but more about those later.
Saigal says the firm is run along three core business streams. One is ship repair and ship maintenance, one is shop conversion, and the other is newbuilds. “About 50% - 55% of the business share is still made up of ship repairs.”
At a time when lines of credit for such expensive work may be thin on the ground, Saigal says that whilst not immune, such revenue streams are relatively untouched by the collapse of cheap credit.
“Repair work typically does not require credit or financing from outside organisations, the owners plan for this as part of the vessels lifecycle. Additionally, when you look at conversions, owners undertaking these jobs have good credit lines with their financiers and institutions built up over decades, and finally, newbuild owners tend to have the credit organised before they come to the yard.”
Saigal adds that owners have tried to tempt the yard into becoming strategic partners, taking a share in vessels built there, but the Dubai yard has chosen not to go down that route. “It’s flattering, but we have taken a back seat on that. I think that blurs boundaries.”
The Drydocks World group on the other hand has engaged in this sort of business, (See Seismic Shift on arabianoilandgas.com).
The company began newbuilds back in 1995, but made some major investments in capability and infrastructure to support this in 2002 and 2003. “From that point onwards we became a real player in that field,” says Saigal.
The managing director explains that the newbuilds part of the business has come about thanks to a desire to capture more offshore oil and gas work.
Focusing on the offshore upstream business sector of course makes sense in the Middle East, but other UAE yards have built solid reputations for jack-up related work. In a relatively short stretch of coastline there are several world class jack up maintenance and fabrication facilities, but the high concentration does not dampen Saigal’s enthusiasm for the market in this region.
“That is something we are looking into, and we recognise that there are players well into the jack-up market, but I think we can deliver a value added product in the years ahead. Some of the jack-ups in the region have really come of age, and will need replacements. Most of the operators in these waters are tied in with, or owned by government related entities, and ultimately we are here to serve the nation. We are, ultimately, a national asset.
Current oil and gas related work includes two FSOs for a joint venture between Euronav of Belgium and Overseas Shipbuilding Group (OSG). Each of them have put a ULCC into the yard’s massive conversion dock.
The vessels measure up at 318 metres in length and 68 metres beam. It is thought these vessels will eventually go to work on the Al Shaheen Field, operated by Maersk Oil Qatar, to replace the giant Knock Nevis.
In April last year, the first of two 16 000 tonne hulls constructed for Aker Solutions was delivered from the Dubai yard. Considered amongst the most advanced drilling rigs of its kind, the H6E rigs will be able to drill in water depths up to 3000m, with a maximum drill string length of 10 000m. Asked whether the successful delivery of the H6E hulls opened new doors to Drydocks World – Dubai, Saigal is unequivocal.
“Definitely. The end product that left this yard has made a real impact in the offshore industry. That’s where the market is moving in the years to come, deeper E&P work, and we have proved we are both capable, and leaders in this field.”
A reputation for on time and on budget high-end conversion work also helped deliver the Golar Frost vessel to Drydocks World – Dubai. The 290 metres by 48 metres regasification unit marks what Saigal says is just the beginning of a growing market for such vessels. The concept of FSRU vessels is widely regarded as providing shore based safety to terminals and population centres. Most cities would rather not have large liquefied natural gas storage nestled amongst the population centres, for obvious reasons.
“Parking the vessel 30 miles offshore and pumping the gas in through a pipeline to the grid is much safer. More and more countries want to be safety conscious and reduce risk exposure to their citizens, so I think this is something that we will see more of.” Emerging trends are a particular focus for Saigal. Despite the yard’s impressive heritage in upstream, greener technology is a slice of the business he only sees growing, and the UAE’s increasing emphasis on this should position the yard to capitalise on a whole new revenue stream in the years to come.
“Today clients are moving towards environmentally sound energy, so wind and wave will come to the fore in time. We have strategic conversations about the future and wind and wave work will almost definitely be an arena we work in. With Masdar and the International Renewable Energy Agency IRENA coming up in Abu Dhabi, all these things are possible. It’s really exciting.”