Douglas Westwood, Canary Provide Views on Asia Pacific Oil, Gas Industry
Singapore is, I think, a special situation, combining a major commercial centre with a can-do attitude from government plus a great workforce has made it the de-facto hub for the Asia-Pacific offshore industry – which is why my firm has its regional base here.
DE: The biggest hotspots are the South and East China Seas. For NOCs, the biggest challenge in those areas is the territorial disputes between neighbouring countries. The South China Sea, for example, is shared among Vietnam, China, Philippines, Taiwan, and others. Of course, it’s not much easier for international oil companies there, which also must navigate the aggressive offshore drilling claims. The growing demand for gas in Myanmar has turned the Bay of Bengal into an offshore hotspot. There are continuous disputes in that area that will require new arbitration and rules. The role of international oil and gas majors may be important here, as are opportunities, but the conflicts between nations on the coast claiming oil and gas assets may retard exploration efforts.
Singapore is a good example, because although it is non-oil producing, the country has attracted multi-billion dollar fixed capital investments by major oil companies for its oil refining industry, which is in the top three in the world. The country’s transparent business and mature legal and financial systems have made it very attractive to gas stakeholders. It may be a non-oil producing country, but they’ve made oil refining central to their economy.
Mergers & Acquisitions
JW: As Douglas-Westwood makes much of its income providing commercial due-diligence on deals, I must first declare an interest. That said, M&A is part of the on-going evolution of any business sector. However, it must be done for the right reasons; in our experience of having worked on many billions of dollars’ worth of deals, to make M&A work, the result must be that one plus one will equal a lot more than two! On the whole it is beneficial. Many sectors can only compete if they are of sufficient scale, and indeed international oil companies would prefer to sign one contract with a big contractor than individual small ones for each country in which they operate.
DE: Our core philosophy with M&A is not "buy and sell" but "buy and contribute". We purchase companies with solid track records and give them the tools they need to spur healthy expansion -- tools like proven management strategies, marketing capital and a national footprint. We bring new opportunities to these companies and their employees -- but, just as importantly, we preserve and honor the legacy, culture, and teams that have made each company strong.
Our acquisitions strategy is equally about our customers. We integrate new companies with existing services and locations to provide a wider base of national services to existing customers. We now have operations in every major shale play in the U.S., so our customers enjoy a one-stop shop for wellhead services. This strategy has been a win-win for our customers, our existing holdings, new companies under management, and, of course, our overall portfolio growth.
Myanmar – a Rising Oil and Gas Landmark
JW: After the historic political and economic reform in 2011 and the lifted sanctions in 2012, Myanmar has generated serious interest from international oil majors such as Chevron, ExxonMobil, Shell and Statoil amongst others, to participate in its first offshore bidding round of 19 deepwater and 11 shallow water blocks. Although the outlook for Myanmar gas production remains uncertain as there is no capacity indication for those offered blocks, DW expects further developments and an upward trend in the gas sector thanks to operators’ confidence based on sound historical performance of Myanmar’s large gas fields such as Shwe, Yadana and Yetagun.
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