Oil and gas rig company DNV GL aims to cash in on shipbuilding growth

The Norwegian consultant performs certifications and consulting for oil and shipping companies throughout the region, including Abu Dhabi National Oil Company subsidiaries and United Arab Shipping Company.

Henrik Madsen, CEO of DNV GL. Jaime Puebla / The National Newspaper

DNV GL, a newly merged company that certifies ships and oil and gas rigs, hopes to take advantage of rapid industry growth as shipowners take advantage of falling prices to expand their fleets.

As rental rates fall for particular classes of ships, investors are paradoxically investing in building new ones, says Henrik Madsen, the chief executive of DNV GL, a Norwegian ship certification and oil and gas consulting company. Lower prices at shipyards have boosted orders this year to 2,000 from an expected 1,400 to 1,500, he said. Investors from hedge funds, private equity and family-run businesses are concentrating money in building ecologically efficient ships, which offer further returns on investment by using 20 to 30 per cent less fuel than older counterparts.

“Shipowners may not seem very rational seen from the outside,” he said in an interview at the company’s offices in Dubai. “In traditional deep-sea shipping, the crisis is still there.”

Thanks in part to the uptick in shipbuilding, revenue at the company is expected to rise by 5 to 6 per cent, he said.

Only one month old, DNV GL is the child of a merger between Det Norske Veritas of Norway and Germanischer Lloyd of Hamburg, two of the world’s oldest shipping certification companies. Individually ranked fourth and fifth in the market in terms of coverage of the global shipping fleet, the combined company is now the world’s biggest with 24 per cent of the market and 17,000 employees. It performs certifications and consulting for oil and shipping companies throughout the region, including Abu Dhabi National Oil Company subsidiaries and United Arab Shipping Company.

Mr Madsen says he will keep all employees, so long as they have the flexibility to accept new roles in more than 300 offices and operations centres such as one in Abu Dhabi.

“We’ll fire nobody because we need people for the growth – if they’re flexible,” he said, shortly after addressing employees at a town hall meeting in Dubai.

Another source of growth is the movement of oil companies to frontiers in the Arctic or highly corrosive sour gasfields.

“A lot of the exploration is moving to more harsh environments and sour gas,” he said. “It’s getting more difficult; the ships are more complex now.”

Demand for certification is extending to shale oil and gas, with one project in the UK and a handful in the US, and to the Arabian Gulf region, where Qatar is at work on a comprehensive legal framework for regulation of the energy industry.

Another bubble in the shipping industry could be on the horizon with plans for building 100 new mid-range tankers, which carry oil products such as petrol, said Mr Madsen. “Maybe you need half of them” because of new refining capacity and falling American imports, he said.