Wheeler Management: Australian turnaround

Sydney: Australia has been losing out in terms of energy exports as a result of a lack of productivity, however, the new government under Tony Abbott is changing this malaise, argues a serial entrepreneur in today’s Maritime CEO profile.
 
Andre Wheeler heads up three firms: Lake Argyle, Ceti Marine and Wheeler Management, providing unique access and expertise to the Australian and Asian offshore markets.
 
The mining boom, which has slowed up as China has cooled off, has hidden much of the structural weaknesses of the Australian economy, Wheeler argues. Poor productivity and higher costs in terms of a high Australian dollar have made raw materials from Down Under a less attractive prospect, Wheeler says.
 
“From an Australian perspective, what is of more concern is that the likes of China are finding cheaper sources of energy supply,” notes Wheeler.  
 
“With the improvements in shale gas recovery and the USA getting to be a net exporter, and the significant finds in Myanmar, these all highlight that Australia is a high cost producer,” says Wheeler.
 
In a way, suggests Wheeler, the slowdown has assisted the government and business to get clarity on the issues of productivity as a whole, rather than having it masked by global shortages in key infrastructure minerals such as iron ore. A good example, he cites, would be the decision by Woodside to move the Browse project to floating LNG, driven by the $10bn in savings by not doing it on Australian land, so that it can get product to China at a competitive price.
 
The new Australian government is “very good news” for resources and the oil and gas community, Wheeler reckons, as it will reduce the regulatory costs associated with managing resource extraction, for example lease applications and management, as well as streamlining the approvals process.
 
Furthermore, he says, Canberra will start addressing the structural issues associated with labour and tax costs.
 
“This may not be popular with the unions, but this is the elephant in the room that needs to be addressed,” Wheeler maintains.
 
As mentioned Wheeler heads up three firms. In the past year he has been busy in the area of service provision to the oil and gas exploration and rig supply markets, an area that cuts across all three companies.
 
For example, Lake Argyle’s growth will come from the supply of assets and services within the Australasian region, that will assist companies as exploration goes further offshore and into deeper water. Growth will come from securing and sourcing rigs from Southeast Asia and China to a market that is significantly under serviced.
 
“In the Gulf of Mexico, the ratio of rig to platform is in the region of 1:13,” he notes, “yet in Southeast Asia and Asia you find that there is only one service rig for every 50 odd production platforms.”
 
Wheeler is in the process of raising funds, with a view to a possible IPO in order to provide additional services in this market such as marine fuels and water.
 
Ceti Marine, meanwhile, is undergoing a change right now. Over the last period the focus has been similar to that of the Lake Argyle approach, but with a focus on the Gulf of Mexico and the Middle East. Ceti’s core competence is in pipeline repair. It is anticipated that Ceti Marine will roll out these core skills into the Southeast Asia and Asian areas as those fields mature and move from construction to maintenance phases in the next few years.  
 
Wheeler Management, the final leg in Wheeler’s business tripod, provides the glue for the other two, in that it provides specialist advice in terms of market trends, logistics and supply chain issues. The growth for Wheeler Management comes from the ongoing need for specialist advice on doing business in Asia, and particularly China. This includes sourcing and profiling marine service providers in the region. Of late, growth has come from consulting services provided to fund managers who are looking for entry points into the jack up rig and general marine services providers into the Southeast Asian and Australian markets.  [18/11/13]

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