Norwegian rig outfitting yard Westcon has signed an intentional deal to acquire a pair of companies from South Korean fabrication group STX.
The move to buy out equity in the STX Norway Floro and STX Norway Floro Design units is aimed at boosting Westcon’s capacity ahead of an expected rush of additional rig upgrade work in the coming years, deputy chief executive Arne Birkeland told Upstream.
"This potential transaction would give us more in our toolbox to offer to potential clients and give us increasing flexibility, as well as strengthen our competitive position,” he said.
Birkeland believes the deal has potential synergies for the yard’s core business of upgrades and servicing, as well as shiprepair, giving it access to expanded docking capability and additional sites.
It would also significantly boost Westcon’s existing workforce of 760 to boost human resources at the yard as the Norwegian fabrication and engineering sectors face a critical shortage of skilled staff amid a boom in offshore activity.
STX Norway Floro controls three shipyards – at Floro, Sogn and Fjordane in western Norway – that carry out ship construction, repair and conversion, with a current workforce of 600.
The Design outfit is based at the Floro yard and is engaged in ship design and conversion. Both companies are wholly-owned subsidiaries of STX Europe.
“As well as assembling highly sought after competence in the company, access to a larger dock and an attractive geographical location will strengthen Westcon’s position in the market,” Birkeland added.
The Westcon yard at Olen on Norway’s west coast carries out upgrade and outfitting of foreign-built rigs to ensure they comply with stringent operating requirements for work in the domestic sector, typically handling between four and eight units per year.
Most notably, it had to carry out extensive remedial work on Saipem’s newbuild semi-submersible Scarabeo 8, built in Russia and at Italy’s Fincantieri yard, to fix myriad technical issues.
The rig was finally delivered earlier this year after a two-year stay at the yard to start drilling work for Statoil and subsequently Eni in the Barents Sea, where it is working on the Italian operator’s Goliat field.
Westcon also outfitted the semisub COSL Pioneer for Chinese-owned contractor COSL Drilling Europe, carrying out repairs to welding faults on the rig, built at China’s CIMC Raffles yard, as well as other work.
The unit was finally delivered last year – about five years late - to start work for Statoil after a protracted stay at the Norwegian yard.
An influx of around 20 newbuild rigs – both semisubs and jack-ups – set for delivery from overseas yards is expected in the Norwegian sector over the next three years, posing a demand for more outfitting capacity as well as rig workers.
Westcon is one of three main Norwegian yards that carry out such upgrade work and Birkeland said: “We want to be well-positioned in relation to upcoming projects.”
He said the parties will now work towards a final sale agreement, with the putative deal also under scrutiny by competition authorities, but would not reveal the value of a deal or a possible schedule for completion.
Meanwhile, the yard is also going to where the action is, with a team from Westcon having recently carried out repairs to Ocean Rig semisub Eirik Raude at Las Palmas in the Canary Islands before it starts a new drilling job off Liberia.