The oil and gas industry has gone through a significant transition in the last few years. During this time Medserv has experienced highs and lows as its major clients looked to react to align themselves with lower oil prices. Most importantly, however, Medserv has emerged stronger and more resilient.
As the industry recovers from the brutal last few years caused by the price collapse in 2013 and major environmental disasters such as the Gulf of Mexico oil spill in 2014, there has been a resurgence of confidence in the industry. Growth is increasing at a sustainable rate, as increased upstream production continues to have a positive knock-on effect and the price of crude has also stabilised.
However, the industry as we know it has changed and long-term success for organisations operating in the oil and gas industry will be dependent on a strong future-proof strategy.
New oil finds are increasing in remote geographies and difficult environments. In short, while there is an adequate supply of oil and gas for future needs, the new projects will be larger, more remote and complex.
In addition, following recent incidents, the world is now much more critical of the oil industry. The industry has been reporting societal performance for some time, but the demands are expected to continue to increase. Greater consultation and approval with various stakeholders will become a standard prerequisite. Projects will have to be shown to be transparent, to include environmental impact assessments and protection as well as community relations, and so on. Regulatory frameworks and licences to operate will be increasingly more stringent and demanding.
In short, while the industry crisis may have ended, its after-effects will continue. The Medserv board of directors were quick to recognise this. The proactive strategy set in place has been one of Medserv’s strengths and allowed us to retain our coveted position in the market and grow our value add offering. The Medserv board made a conscious decision that overcoming the recession had to be dealt with in a multitude of ways, and only with a robust response and sound strategic direction would we be able to provide a fit for purpose response.
The board extended their business development team, ahead of the trend and well before other companies in similar positions at this time. Bringing in the business acumen to complement technical skillset typical of such an industry is essential for growth. The Medserv senior management team today has metamorphosed and will continue to adapt to meet the challenges before it.
Despite the forecast growth of the industry, the trend towards renewable and alternative energy is another threat to traditional oil and gas companies
Medserv decided to go after business not in its core areas and expand its presence beyond the Mediterranean basin. This initial bold step paid off, as today Medserv has major contracts in Egypt and Suriname, and we are now being invited to participate in a number of international tenders. While Malta will continue to serve as the company headquarters, skilled and experienced Maltese staff members are now positioned in various bases across the globe to support local workers. The company also runs a mentoring programme to ensure that local employees and appointed contractors both attain and maintain the required standards.
The Medserv board was quick to identify that diversification would be key to growth both in terms of geography as well as increased ‘bandwidth’ of services provided with the goal of being able to provide added value across the supply chain.
The company refocused investment and efforts on asset maintenance and engineering services and sought growth via collaborations and acquisitions. In 2016 Medserv purchased METS, an oil and gas services company providing premium threading services for oil country tubular goods (OCTG). This business, based in the Middle East, was not only a new product portfolio for Medserv but provided a totally new geography.
In 2019, Medserv signed a joint venture with Infinity Oil Field Services to provide a broader portfolio of highly specialised technical services to the oil and gas market. This joint venture, InMedCo, expands Medserv’s technical and engineering capability and combines its integrated logistics capability with Infinity’s specialised technical and engineering expertise, offering clients value-added expertise and reduced rig or vessel downtime.
So what lies ahead?
In the short term, companies such as ours must maintain capital discipline. Notwithstanding the oil price increases, it is imperative to stay the course on cost reduction, standardisation and operational efficiencies and collaborations. In the long term, we need to ensure our portfolios are profitable and diverse to allow for low break-even oil and gas prices.
In the long term, developing a future-proof overall portfolio will be key and management must consider how the overall business should evolve. This will entail taking into consideration the transition to a lower carbon world and entry into new types of energy operations may be one avenue for a more resilient future-proof strategy.
Despite the forecast growth of the industry, the trend towards renewable and alternative energy is another threat to traditional oil and gas companies. Coupled with the rise in pro-eco legislation and governmental pressure, the industry will continue to be under increased scrutiny.
Some of the European oil majors are already investing in low-carbon plays, which range from traditional renewable energy (such as wind and solar power generation) to more recent acquisitions involving electric vehicle infrastructure. Medserv’s investment in green energy dates back to 2014 with the launch of its solar farm at the Malta Freeport base.
Medserv’s success lies in the good business skills which complemented technical knowledge and allowed us to regroup, reinforce, adapt and grow.
This same business acumen allowed the Medserv board to realise that as well as growing the business, an internal review was required in order to deliver a robust sustainable business for the future, where business continuity and succession are key. The first part of this evolution was to appoint a new CEO to replace Anthony Diacono. In 2018, Karl Bartolo was appointed CEO; this dynamic leap of faith in appointing a CEO who was under 40 demonstrated Medserv’s vision and bold approach.
“Assuming the position of CEO of Medserv was an incredibly proud moment for me personally; however, without the foundations being laid by the previous team, we would not be in a position today to tackle the inherent challenges facing the industry,” Bartolo said. “Medserv was traditionally an oil and gas services company that used its assets to provide services to its clients, oil and gas operating companies. Today we are a group providing value add services across the oil and gas supply chain; a group whose industry expertise is sought after and called upon in various parts of the globe.
Chris Clark is regional general manager, Medserv Group.