CSSC Offshore plows ahead despite stormy seas

The impact of depressed oil prices is being felt across the upstream sector of the petroleum industry. And offshore drilling is no exception.

However, like many other major players, CSSC Offshore still made an appearance at the Offshore Technology Conference (OTC) - the world's largest of its kind - held in Houston May 2-5, where the most recent industrial innovations and technological capabilities from around the world were on display.

"Even though the current market environment is not that great, it doesn't mean that there is no market. In fact, this is the time to show who has the real strength," said Han Guangde, chairman of the board at Guangzhou Shipyard International (GSI), a subsidiary of the China State Shipbuilding Corporation (CSSC).

Han was one of more than 20 CSSC executives attending the 2016 OTC. "This is the best time to improve our offshore research and innovation capabilities through M&A or joint ventures, and that's what we intend to do," said Han.

As a builder and offshore engineering company, GSI, together with its sister company Chengxi Shipyard, has successfully delivered three FPSO (floating offshore, storage and offloading) conversions for clients in the last two years.

Han said GSI is willing to accept challenges as demonstrated by the two polar class module carriers for the Yamal LNG project that they built and delivered recently with GSI on a breakneck schedule. The first of their kind ever built, they are designed to sail into the harsh environment of the Arctic and do their job.

GSI is relocating its shipyard from Guangzhou to Nansa with upgrades. "We aim to increase our offshore capability and optimize our production mix with this relocation," said Han.

Chengxi Shipyard, after delivering the three FPSO along with GSI, is taking the current drought in demand for offshore engineering and fabrication projects as a recess, said Yin Xueming, chairman of Chengxi. Like GSI, it has strategically turned its attention to R&D so that when the market does come back, it will be ready to face new challenges.

"We have steered away from new builds and focused solely on converting and upgrading. It has proven to be less risky compared to being an engineering, procurement and construction contractor for new units, especially when owners start to delay payment and even abandon their units for lack of chartering," said Yin.

Due to the success of this strategy, Chengxi is on a mission to become a leading FPSO and FSO conversion and topside modules fabrication yard in China.

Huangpu Wenchong Shipyard (HPWS), CSSC's largest offshore engineering and equipment builder in Southeast China, has gained numerous offshore projects.

It delivered a jack-up rig to Alliance Offshore Drilling in Singapore in 2015 with another contract under negotiation.

It is expected to sign a contract to build a lift-boat for Zentech in the US sometime soon.

HPWS also holds more than 10 other offshore contracts with various clients. Its goal is to increase its offshore business to 30 percent from its current 15 percent, according to Dong Zhicheng, deputy general manager of the company.

Another showcased CSSC company at the 2016 OTC was Shanghai Shipyard. According to its vice-president Jin Yu, Shanghai Shipyard's Tiger series is the first deepwater drilling ship developed in China, with four under construction.

Started in 2012, the first ship is expected to be completed before the end of 2016. Shanghai Shipyard also designed and constructed seismic vessels for Sinopec and CNOOC with two new contracted vessels also under construction.

CSSC Offshore in Houston is shifting its focus to R&D also, said Chen Weimin, director of business development.

"It's tough to do sales right now, and many projects were canceled in the industry. We're currently focused on finding R&D partners in Houston and connecting them with CSSC companies in China," said Chen.

mayzhou@chinadailyusa.com