John Evans, CEO of Subsea 7, discusses the offshore space, success factors, the value chain, customer relationships, barriers of entry, future industry prospects, managing backlog, and misconceptions about Subsea7.
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Quick takeaways
Subsea7's success is attributed to their ability to offer innovative solutions, their extensive fleet of offshore assets, and their focus on maintaining strong relationships with clients.
Barriers to entry in the oil and gas sector include significant investment requirements, competition from established players, and cyclical industry trends, while in the offshore wind sector, the evolving supply-demand balance poses potential challenges for new entrants.
Natural gas plays a crucial role during the energy transition as a reliable and balancing source, and Subsea7 anticipates an increase in natural gas projects globally in the next decade.
Deep dives
Subc7's role in the oil and gas industry
Subc7 provides project delivery services to clients in the oil and gas industry. They work with clients to develop, engineer, procure, and install field development projects. Their main customers include international oil companies, national oil companies, and independent oil companies. They have established strong relationships with major players in the industry and offer a range of technology solutions.
Subc7's involvement in the offshore wind sector
Subc7 has also ventured into the offshore wind sector, working with major European utilities and wind energy companies. They provide expertise in developing offshore wind fields, offering engineering, procurement, construction, and installation services. They have expanded their operations to the US Northeast coast, but remain cautiously entering this market due to the challenging environment. They believe that offshore wind will be a major energy source in the future and are well-positioned to capitalize on this growing sector.
Factors influencing success in the industry
Subc7's success in the industry is influenced by several factors. First, their ability to offer innovative solutions and project designs that optimize field development and flow assurance. Second, their extensive fleet of offshore assets and global presence allow them to efficiently deliver projects around the world. Third, their focus on maintaining a strong balance sheet and managing risk ensures financial stability during industry cycles. Finally, their long-standing relationships with clients and expertise in the field contribute to their competitive advantage.
Barriers to entry and supply-demand balance
In the oil and gas sector, barriers to entry include the need for significant investment in assets and technology, the challenges of competing against established players with larger fleets and expertise, and the cyclicality of the industry. Subc7 believes that the lack of investment in new assets and the experience gained from previous industry cycles serve as barriers to new competition. However, they are cautiously monitoring the supply-demand balance in the rapidly growing offshore wind sector, as increased capital flows may lead to potential challenges in the future.
Importance of Natural Gas in Energy Transition
Natural gas is a crucial commodity for the world and will serve as a bridging fuel during the energy transition. As renewable energy sources like solar and wind are intermittent, natural gas provides balance and reliability to the energy system. The speaker highlights how they are involved in various natural gas projects globally, including Australia, Qatar, Saudi Arabia, and Turkey. The market for natural gas is becoming more globally traded, and the speaker expects an increase in natural gas work in the next decade.
Global Offshore Opportunity Set
The speaker discusses the exciting opportunities in the global offshore space, highlighting specific regions. Brazil is mentioned as a major focus area, with plans to put 15 floating production ships in operation in the next five years. Guyana is also highlighted for its rapid development of offshore fields, with future projects, including FPSOs, in the works. The speaker acknowledges the strong market in the US and their involvement in projects in Mexico. Other regions mentioned include the UK, Norway, Turkey, Angola, Namibia, Egypt, and Australia. Despite potential misconceptions, the speaker emphasizes Sub-C7's role in facilitating the energy transition and expects convergence between the oil and gas sector and renewables.
This week we engage in a conversation with John Evans, CEO of Subsea 7. The discussion covers a wide range of topics, including the history and dynamics of the offshore space, factors crucial for success, the structure of the offshore value chain, customer relationships, barriers of entry, and future industry prospects. John also addresses misconceptions about Subsea 7 and provides insights into managing backlog.
[0:00] Who is John Evans?
[7:00] The History of the Offshore Space
[13:00] Things need to succeed
[15:00] The Offshore Value Chain
[30:00] Customer Base
[40:00] Business Relationship
[45:00] Supply, Demand, and Barriers of Entry
[55:00] What is to come?
[1:00:00] Managing Backlog
[1:11:00] Misconceptions about Subsea7
[1:14:00] More from John Evans, Subsea7 & and closing questions.
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