The best of both worldsFebruary 4, 2021
Oluwaseun Oseni, managing director and CEO of Knots Global and Glenstar Marine, talks to The Energy Year about the role of standards in the marine sector and the companies’ recent activities. Knots Global provides vessels for marine logistics (predominantly tug boats), while sister company Glenstar Marine provides mooring co-ordination and management, marine consultancy and marine logistics services.
What do you see as the greater driver for ship utilisation: local content or standards?
Local content has been crucial in pushing Nigeria forwards. However, it is skewed towards the upstream sector. In the downstream, we export crude and then refined products are bought back by local marketers from international oil traders. This means that our sector is usually more driven by standards and not so much by local content.
What’s more, for a company to provide offshore services to a major IOC it has to meet the IOC’s standards. The local content drive does not necessarily have any authority to force an IOC to use an indigenous company, as this will depend on their own vetting process. Therefore, although important, local content will not push to get a company’s services used. What really pushes our industry forward are the standards.
In what ways does IOC standard grading shape the local maritime scene?
IOC standards are relatively high. For example, we recently got a contract with Total to be their official STS [ship-to-ship] company in Lagos. It took around 12 months to engage with all the required procedures. They also vetted all the processes, vessels and hoses we were going to use to do the operations with. If one wants to work in the international scene, one has to comply with their grading systems.
By contrast, Nigeria does not have any formal way of vetting this arena. It seems that it is all about figures and not about standards. For instance, you will see companies working with fibre speed boats, which all boils down to pricing. We understand how companies are squeezed, as so much depends on the pricing of different clients. The IOCs will pay more than USD 6,000 per day (it usually takes an average of two days to complete an STS operation) while local companies pay USD 2,000 for the entire operation.
Due to this, we find three types of service companies: local companies that charge the minimum with no standards, the internationals such as Fendercare Marine and lastly companies like ours, which are in the middle. We understand how international standards work but also how the local scenario plays out. Thus, we have the best of both worlds.
In order to get to this point, one has to understand what the internationals want. This IOC checklist includes making sure one’s fenders are new and tested, that hoses are in perfect condition and that marshals are certified, among other things. By covering these steps, we are now qualified to work for all foreign traders. So, it will be a question of meeting their requirements, proving this and acquiring the necessary documentation.
What project capacity does Glenstar Marine have and what recent developments has it been involved in?
We have a total of seven sets of equipment spread out in Lagos (Nigeria), Lomé (Togo) and Escravos (Nigeria). This means that we can carry out as many operations in different locations at the same time. A set will normally include four units of primary fenders, two units of secondary fenders, transfer hoses, a mooring master and a tug boat. We have bases in Togo, Lagos and Escravos. For our major clients, we provide STS services and we check the fenders, hoses and mooring masters.
Sometimes operations span more than a month, especially when we are working on an FPSO project as it involves small vessels that transport product from the FPSO to a larger vessel.
In reference to recent operations, in 2020 we carried out a three-month project with Oando where we had to transfer 1 million barrels – 100,000 barrels per trip . We are also working with all the international oil traders and local marketers. Carrying out satisfactory work for these types of clients opens up many more doors. Yet competency is something one has to show time and time again.
What specificities do STS operations have in terms of rates, timing and nature?
The rates we charge are on a daily basis. On this note, we would generally charge an international company USD 6,500-8,000 per day while locals can have a reduced rate of around USD 5,000-6,500 per day. An operation takes about three days on average, depending on its nature.
In addition to this, we have the spot market and the contract market. In the former, they get to know you and create that bond that leads to more work. The contract market is very different as it requires the company to mobilise, for example, to a certain oilfield. For such crude contracts we have to go to the site, wait for the crude to be extracted and then take it from one vessel and transfer it to another one. This means that every crude operation that we carry out takes around three to four months to complete.
What synergies do we find between Glenstar Marine and Knots Global?
Glenstar Marine focuses on STS, for which it invests in all the necessary equipment used for transfers (i.e. fenders, hoses, ropes and mooring masters). The tug boat is used to convey it offshore. On the other hand, we have Knots Global, which owns the vessels.
Normally companies do combined servicing by fusing STS and vessel maintenance. We, however, decided to separate these services into two different entities. This also gives each one of our companies the capacity to grow independently. Interestingly enough, Glenstar Marine is a client of Knots Global as the latter owns the type of vessels the former would need to carry out its services. In a way, it’s a plug and play setup, so if Glenstar Marine grows, Knots Global grows as well.
What is the rationale behind the Knots AIS Tracking Solution?
The world is moving into a new dimension – it’s all about technology. While the banking, real estate and telecommunication sectors have actively embraced 4.0, the marine tech space is not quite there in terms of development. There are some platforms but what we are trying to create is a full-blown marine tech platform where one can track with real-time information any vessel in a stipulated area – its specifications, its status (hired, for example), spec sheets and movements.
Furthermore, we are adding an extra-value service where every spectrum of the oil and gas industry is included, a sort of digital yellow pages. If a company needs STS, it can go through all the service providers and choose which one is most suitable. It will also have a grading system as many of today’s apps have. The initial free service will allow you to see a few vessels in a restricted location (for example, Lagos), while the premium package will allow you to see them in other countries in West Africa and even beyond.
Its functioning works with a click on your touchscreen which will give you all the required information on the vessel. Not only this, we are adding an option for vessel transactions to make the process quicker and simpler – a gateway at the tip of your finger.
What opportunities for regional expansion do you see for your STS services?
We now aim to take Glenstar Marine beyond national boundaries. Our expansion plan has started by creating a base in Togo-Lomé. You see, Lomé has become a safe epicentre for vessel landing in West Africa. In the coming years we aim to grow our footprint in the continent. In 2021, we’re looking at establishing a position in Cameroon and Ghana, while Angola and South Africa are also potential markets for us.
In this regard, one has to look carefully at the environment found in these locations. Firstly, STS is a service born of necessity. Also, it is important to consider that the reason why we do STS here is because our waters are predominantly shallow. Nations with deepwater operations and deep seaports do not require STS services. In Nigeria both the upstream, as in crude exportation and petroleum importation, and the downstream sectors are large, which means there are plenty of opportunities.
What differentiators must one have in this arena and how are you looking to grow your presence in the market?
Over the years, we have made sure to strictly stick to high standards and walk hand in hand with IOCs like Total and Shell. We are also working in the same space as Fendercare because Knots Global has an exclusive contract with them, providing vessels. One has to be selective regarding with whom one works as this brings an added value.
We aim to grow our interdependent structure, which has Knots Global at its heart. The moment Glenstar Marine needs vessels, it will directly pivot on Knots Global. A third leg to our business is the creation of a new company called Knots Shipping, which represents our strategy of moving into the container logistics business. Given the blockade of roads and land logistics, plenty of containers are moved through the creeks via barges and tugboats. In this regard, we have recently signed a two-year contract with Maersk and hope to provide them with unequalled services.