2011 Annual Report - SBM Offshore

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1.5 Corporate Strategy 1.5.1 Introduction SBM Offshore’s new Strategic Plan, covering the years 2012-2016 has been developed through its established Corporate Planning Process. The Company’s Supervisory Board approved the new plan in December 2011. The strategy draws on extensive external analysis of markets, clients and technology developments as well as in-depth internal analysis across the Company's main functions. It also takes into account the outcomes of a number of meetings held with the Company’s Board of Management and Executive Committee. The Plan will continue to be reviewed annually in relation to significant market developments and any other external events that may affect the Company and require a revision to aspects of strategy. Major events around the world have affected local as well as international economies and have a direct impact on the supply and demand for energy related products and SBM Offshore’s business. The Company has refocused its product line on core FPSO products, finalised its organisational changes and begun diversifying financing needs to meet the new challenges it faces. The balance between global energy supply and demand is affected by worldwide economic growth, the depletion rates of producing fields, natural disasters, technology development and social unrest. On the demand side economic growth positively affects the demand for energy and this is expected to increase in future years. On the supply side we have see a shift in the world energy mix towards fossil fuels following the terrible earthquake and tsunami in Japan and the consequent impact on the nuclear industry. This has caused a surge in demand for LNG imports into Japan and globally increased demand for gas production. Technological advances in production of shale gas in the US have created an over-supply in North America with relatively low gas prices. This could become a global trend and affect investments in floating liquefied natural gas (FLNG) production negatively. Social unrest in oil and gas producing countries creates uncertainty regarding worldwide oil production capacity. This is reflected in the price of oil and also encourages investments in more stable countries or offshore locations, which may be less affected by geopolitical tension. The most significant impact on worldwide oil and gas production levels comes from the natural depletion of producing fields, which has been estimated to be as high as 8% per year. The long-term challenge is stabilisation of supply, which can only be achieved by development of new oil and gas fields. Many of these new fields will be located in remote offshore locations in deepwater, where FPSOs are the preferred production method. Our clients have substantially increased their E&P budgets to meet increased demand for oil and gas production and to cover the increased costs associated with development of deepwater fields. Increasingly, clients are demanding larger, more complex production facilities constructed and operated using local human resources. The Company has refocused its organisation to meet these challenges. A new structure seeks to align seven new execution centres and ensure they have full responsibility and accountability for their individual performance and for delivering execution improvements, in line with the Company's principles, rules and guidelines. Furthermore, as part of reorganization, the Company is redefining its This is a customized selection from the SBM Offshore N.V. Annual Report 2011 12
and, vision, promises to stakeholders and values, as shown below. Strong global demand for FPSOs resulted in a strong order book during 2011. The Company believes demand for FPSOs will remain strong over the next five years, with continued strong growth forecast in deepwater worldwide and particularly in Brazil and West Africa. This will allow the Company to select its preferred business and further strengthen its order book. The risk/ reward balance of each project is the main selection criteria. The disappointing financial performance over last few years of FPSO projects worldwide is an indication that rewards are structurally not aligned with obligations and liabilities of FPSO contractors. The Company will focus on core products, which have traditionally yielded good margins: the lease or sale of FPSOs and related services and products. The current market outlook supports this focus and should enable the Company to grow in line with expected expansion of the FPSO market. The increasing size and complexity of FPSOs underpins demand for the Company’s technical expertise and leads the Company to forge new partnerships in order to finance and develop the local content component of FPSO projects. The on-going effects of the debt crisis will impose more stringent bank regulations, with implementation of Basel 3 principles, which will make it more difficult to secure long-term debt through the project financing markets. In order to finance continuing growth in the lease fleet the Company is diversifying its sources of long-term debt by widening its core banking group, by signing a long-term corporation agreement with Mitsubishi Corporation to develop FPSO projects in partnership, and by preparing to access debt markets directly. This is a customized selection from the SBM Offshore N.V. Annual Report 2011 13
Page 2 and 3: Table of contents 1 Overview 1 1.1
Page 4 and 5: esource, through selected R&D, to m
Page 6 and 7: Business Model The Company generate
Page 8 and 9: 1.3 Snapshot 2011 (US$ mln.) 2011 2
Page 10 and 11: 1.4 Stakeholders Information 1.4.1
Page 12 and 13: 1.4.5 Investor Relations The Compan
Page 16 and 17: 1.5.2 Vision, promises and values V
Page 18 and 19: The Company only enters partnership
Page 20 and 21: Supply Chain In line with its Code
Page 22 and 23: 1.6 Corporate Management Systems &
Page 24 and 25: Status updates for the implementati
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Page 28 and 29: organisation has been implemented w
Page 30 and 31: 3.1.6 Local Content Brazil In Brazi
Page 32 and 33: New contracts During 2011 the Compa
Page 34 and 35: 3.4 Product and Technology Developm
Page 36 and 37: time, and cost. 3.4.3 Offshore LNG
Page 38 and 39: Appointment of a Managing Director
Page 40 and 41: Loans or guarantees No loans or gua
Page 42 and 43: In case a binding proposal is made,
Page 44 and 45: 3.5.5 Shareholders Share capital At
Page 46 and 47: Dividend The Management Board is au
Page 48 and 49: former notary and presently a lawye
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Page 52 and 53: Onshore Operations In addition to t
Page 54 and 55: voluntary basis in Brazil for Occup
Page 56 and 57: Permit-to-Work (Carros) Safety is a
Page 58 and 59: Although unhappy with the increases
Page 60 and 61: 2012. The primary emissions from th
Page 62 and 63: 3.8 Human Resources 3.8.1 Introduct
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The total headcount is based on all
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This is a customized selection from
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The Employee Share Ownership Plan,
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White Collar Staff Training is base
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3.9 Sustainable Initiatives 3.9.1 C
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3.9.2 Supply Chain in Focus SBM Off
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3.9.3 Local content In a number of
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Equatorial Guinea A very motivated
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the building process, an SBM team a
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This is a customized selection from
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5.1.2 Environmental Reporting Envir
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Total Production of Hydrocarbons Of
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HSS Accident Statistics for Dynamic
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Regional CO2 Emissions Values expre
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Permanent Part Time Employees Headc
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Women Men Equality % of Women in ma
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GRI Index Level C Vision and Strate
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LTIFR = (LTI x 200,000)/ EH Where:
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2011 Annual Report - SBM Offshore

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