Surf and turfOctober 3, 2016
TOGY talks to Mohamed Taharim, CEO of Aquaris Offshore, about the activities of hospitality companies servicing offshore, the different requirements of onshore and offshore hospitality services and the increasingly fierce competition in the industry resulting from the dwindling work available. Aquaris Offshore is a provider of catering and hospitality services to the oil and gas industry in Malaysia’s onshore and offshore.
Who are you currently working with in Malaysia? How do these contracts typically work? What is the average contract length?
Typically, the hospitality services on board vessels or platforms covers the supply of food, and non-food provisions and the hospitality crew is comprised of the catering crews, housekeeping and the laundry crews. Depending on the number of personnel onboard (POB) the number of crews deployed is between 10-15 people. On the platforms, the crews are serving mostly the client’s personnel; on vessels they serve mostly the construction crews.
The duration of the contract for platforms is two years’ primary term with an option of a one-year extension; for vessels the current contract is between one to three years.
What HSE requirements do you have to consider when providing your services to the oil and gas sector? How does this vary between onshore and offshore?
There are three parts of the HSE requirements that need to be complied with. First, the crew itself needs to be equipped with all the necessary training, such as basic offshore safety training (BOSET), food handling training, basic offshore first aid (BOFA) and good hygiene practice. Apart from these qualifications the crews need to be medically fit and free from Typhoid and Hepatitis A.
The second part is observation of the various HSE procedures mainly to ensure safe acts, the avoidance of injury and the maintenance of a clean environment. This covers not only our crews that serve on the platforms and vessels, but also those that handle the logistic activities on the ground as well.
The final part of HSE regards food handling, preparation, cooking and serving where those that are involved are covered by the Food Management SOP to ensure that the final products are hygienic and appropriate to the taste of the population onboard.
The requirements for HSE onshore is about the same as offshore but without the requirements that are not relevant to onshore operations, like housekeeping and laundry. Onshore operations are mainly focused on kitchen activities and food serving. The operating environment is less hazardous and away from the main equipment. Hence BOSET and BOFA training and food containers safety requirements may not be relevant.
How would you describe competition in this sector?
Similar to other services in the oil and gas industry, competition is becoming more aggressive as the share of the market is getting much smaller. For example, the number of contracts involving the use of barges or work boats that require catering onboard is fewer and at the same time the duration of the contract is generally shorter, like one to three months, and a six-month contract is currently considered long.
We are seeing that even for a one-month job, which big hospitality companies would normally ignore, are receiving expressions of intent to bid or participate, though they know very well the margin is small. The scenario reflects the desperation just to keep these companies afloat. If we were to secure the contract for this duration, one has to monitor the cost very closely and to ensure no wastage during the operation and at the same time productivity of the crew members need to be enhanced otherwise the loss in operation is certain.
There is also an unwritten regionalisation policy where preference of competing for the bid is restricted to companies from that particular region/state, further limiting the competition and further dwindling the market size.
Taking the platforms tender for instance, the opportunity for the more than 100 licensed Petronas companies to participate is once in three years. Perhaps in total, only less than 15 companies are able to secure contracts from the oil companies whilst the rest of the licensed companies have to wait for another cycle. One can imagine the fierce competition resulting from this scenario. Hence, for the remaining companies, their only option to secure work is to fight aggressively for the few hospitality services contracts offered by vessel owners.