SBM Offshore N.V. (IHC Caland N.V. prior to July 2005) is a Dutch-based global group of companies selling systems and services to the offshore oil and gas industry. Its constituent companies started their offshore activities in the early 1950s and SBM subsequently became a pioneer in single buoy moorings (SBM) systems. The firm leases and operates Floating Production Storage and Offloading vessels, and is involved in the design and engineering, construction, installation, operation and maintenance of floating production equipment for the offshore Oils and Gas industry. It is a main board listed company on the Euronext Amsterdam stock exchange and has been a member of the AEX index since 2003. It had been involved in part of a massive corruption scandal in Brazil.
History
The IHC Holland Partnership The roots of SBM offshore can be found in the partnership Industriële Handels Combinatie (IHC) founded in The Hague. The idea for IHC came up when the Billiton company made plans for tin mining after the war, and a number of shipyards each deemed themselves incapable to build the required vessels on their own after the war. The partnership consisted of Conrad Shipyard in Haarlem, Gusto Shipyard in Schiedam, Machine Factory De Klop in Sliedrecht, J. & K. Smit in Kinderdijk, L. Smit in Kinderdijk, and Verschure & Co. in Amsterdam. These were all strong players in dredging, but wanted to be more efficient. Therefore, they bundled their sales abroad in order have more presence abroad for less cost. IHC Holland did very well. As a specialist in dredging, it had seemed rather immune to the international crisis in shipbuilding, which had been deepest in 1962. Meanwhile, the companies all remained independent, and did their own local sales.
The IHC Holland Company In 1965 the boards of 5 of the 6 companies which cooperated in IHC Holland decided to merge. Conrad Shipyard en Stork Hijsch N.V. could not join, because it was part of the Stork conglomerate. In the new company, Gusto Shipyard in Schiedam would specialize in offshore products. Gusto's Offshore product line had started with drilling pontoons, which were followed by oil platforms, drillships, single buoy moorings (e.g. the famous Brent Spar), etc. The 1973 oil crisis severely hit IHC Holland's offshore activities.
Gusto Staalbouw (Slikkerveer) The construction shop / shipyard Gusto Staalbouw (Slikkerveer) was founded on 1 October 1973 as a separate company called IHC Gusto Staalbouw BV. The reasons to do this were thought to be in the wage differences between steelworkers and shipbuilders. Gusto Staalbouw first moved to Sliedrecht, and then to Slikkerveer in 1975, where it replaced the local Gusto shipyard. Gusto Staalbouw built a number of offshore products like jackup rigs, but also the single buoy mooring, which was fundamental for the growth of SBM.
Single Buoy Moorings (SBM) established in 1969
The single buoy mooring was an idea by Shell. Gusto shipyard started production of SBM's in the late 1950s with technical assistance by Shell. SBM's became a very successful product of Gusto in the 1960s. However, during installation the builder Gusto often had to call on operator Shell for assistance. In order to solve this Robert Smulders (from the Gusto family) founded a new IHC daughter company on 27 February 1969. This was SBM Inc., specialized in SBM's. It would do marketing and sales, delivery, training of operator staff, after sales, and ideas for new products.
IHC Inc. S.A. was established as a foreign holding in Fribourg, Switzerland. It held the participations in the French offshore drilling company Forasol / Foramer, and SBM Inc. Designers, sales, procurement, and financial administration moved to Switzerland. The holding structure meant that instead of paying 48 % corporate income tax in the Netherlands, IHC paid only 16 % in Switzerland. Soon after the designers moved to Monaco. Monaco had 35 % corporate income tax, and no personal income tax, so this move seemed like tax-shopping. On the other hand, Monaco had huge housing cost. The real reason to move there, was that the very international staff required many and speedy work permits, which Switzerland was not willing to provide.
In order to install the buoys, SBM had a ship later called Installer I lengthened at Gusto Schiedam. It got a 50 tons crane, and place on deck for two single buoys moorings. For precise positioning it had many anchors and a system to determine her exact location. She had drills and hammers for undersea pile driving. Her first job was to install a single buoys mooring before the Humber Refinery in England. An early example of SBM's activity was when in the winter of 1970-1971 it installed two SBM's in 80 m deep water in the North Sea.
In 1970 a holding IHC Inter was created to become the proxy owner of the foreign activities. Another new daughter in 1970 was Terminal Installations Inc., designated to specialize in installation of Single Buoy Moorings, and said to be the owner of Installer I.
In August 1971 Egypt ordered 8 single buoy moorings for 65 million guilders, the biggest order for IHC up to that time. It was related to the Sumed pipeline that would be constructed between Suez and Alexandria. In Suez three single buoy moorings would be installed to handle supertankers up to 250,000 ton. In Alexandra there would be five more single buoy moorings. In September 1973 IHC created a participations division, of which SBM was part. In July 1975 Gusto Slikkerveer delivered a more conventional Single Buoy Mooring of 17 m diameter and a height of 11 m. It was especially designed to unload tankers of over 500,000 DWT. Because these could not enter any European harbor, the tankers could also fuel up at the buoy. It would be placed before the coast of Wales in the Irish Sea. It shows the character of the first group of single buoy moorings, which were basically meant as near-offshore loading unloading terminals.
Meanwhile, a second group of SBM's was developed to serve as loading points near offshore crude oil platforms. In January 1974 Gusto Slikkerveer delivered an ELBSM, 'Exposed Location Single Buoy Mooring', this was a subtype of group II SBM's meant for rough conditions. It was 76 m long (i.e. high) and had a 24 m diameter. It would be placed in the Auk oilfield of Esso-Shell near the center of the North Sea. It had a helicopter platform, and would stick 24 m above sea level. Another subtype is the SPAR, which is similar to the ELSBM, but includes storage space. By 1975 IHC had delivered over 60 Single Buoy Moorings.
Reorganization of IHC Holland in 1977-1979 In January 1977 IHC Holland had accepted orders for dredging material amounting to 210 million guilders. These orders were known to lead to a significant loss, but the alternative was worse. In order to get government permission for collective layoffs, and subsidies for modernization, IHC was prepared to get rid of its shipyard Gusto Schiedam. This shipyard built offshore products for which there was little demand, and had not yet been modernized. The total of closing Gusto shipyard in Schiedam came to 80 million guilders for IHC, the state paid another 233 million. IHC kept Gusto Staalbouw in Slikkerveer, which had started construction of single buoy moorings only a few years before. The plan to keep the famous Gusto engineering office failed. Its employees moved to Rijn-Schelde-Verolme together with the other employees.
By March 1978 about 100 single buoys moorings had been sold. The total concept, including installation etc. was very successful. By 1978, there was almost a 100 million guilders of foreign profits in the bank accounts of IHC Inc. in Fribourg Switzerland. A substantial amount of these profits would be used in the reorganization of the parent company.
Single Buoy Storage Meanwhile, the Single Buoy Storage (SBS) had been developed in 1973. It was basically an old tanker permanently fixed to a simple single buoy mooring by a fixed yoke. It allowed the tanker to rotate freely while the yoke prevented it from hitting the buoy in calm weather. From 1973 to 1982 SBM delivered 12 SBS's. While the idea of the SBS (and its successor the FPSO) is simple, the technique is complex. The maximum mooring load, or force, that a permanently affixed tanker can exercise on the buoy is huge compared to that of a tanker which is decoupled in bad weather. When the connection is rigid the mooring load increases even more. Therefore, the link between the SBS and the sea bottom has to be elastic, but stiff enough to hold the SBS in position so she can do her work.
Holdings IHC Inter & Caland Holdings (1978-1984) IHC Inter N.V. was a holding which became the majority owner of the companies which formed the nucleus of SBM Offshore. In 1977 IHC Inc. S.A. was founded by merging IHC Inter S.A. (see above) and IHC Invest S.A. The new S.A. owned Single Buoy Moorings and Terminal Installations Inc. (TII). In 1978 the new company IHC Inter N.V. was founded. During the foundation of the new company the shares of 3.2 million guilder nominal were given to the shareholders of IHC Holland as dividend. Before that, IHC Inc. S.A. first paid 25 million in dividend to IHC Holland. IHC Inter NV would then pay 36.2 million guilders in 10 years to IHC Holland for 60 % of the shares in IHC Inc. S.A. The net result was that the profitable international operations of IHC Inc. S.A. became independent, or safe from the possibility that the troubled dredging division could drag it down. The shares of IHC Inter were irregularly traded at the Amsterdam exchange.
Over 1979 IHC Inter announced a profit of 10.3 million, and that IHC Inc. had just got an order for a floating production system. Over 1980 IHC Inter earned 12.2 million, but did not pay dividend. In June 1981 IHC emitted 191.760 certificates of shares at 105 guilders a piece, i.e. an emission of 20,134,800 guilders. The emission was probably related to IHC stepping into the market for Floating Production Storage and Offloading (FPSO) units.
Caland Holdings N.V. (first called IHC Holdings) would become a minority shareholder in a new shipbuilding company IHC Holland, and had other participations. The old IHC Holland, officially named N.V. Industrieele Handelscombinatie Holland, was renamed to IHC Holdings NV in October 1978. The colloquial name IHC Holland then became the official name of a new dredging daughter company, which included the shipyards and Gusto Staalbouw. IHC Holdings became a 45 % shareholder. IHC Holdings NV, the shares of which were traded on the Amsterdam Exchange, was so often confused with IHC Holland, that the name IHC Holdings NV was changed to Caland Holdings NV in October 1979. It would be wrong to think of Caland Holdings primarily as 'parent company' of IHC Holland. In the annual report over 1980 Caland gave its shares in IHC Holland a nill value, but still made a profit of 17.6 million from other sources.
The FPSO
The first floating production system was Transworld 58, a converted drilling rig, deployed on the Argyll field in the North Sea in 1975. The world's first Floating Production Storage and Offloading unit, or FPSO, was introduced in 1977 with help of SBM and Gusto. It served on Shell's Castellon field in 117 m deep water in the Spanish Mediterranean. Delta was basically a Single Buoy Storage in which the 59,000 DWT tanker also served to produce oil, instead of simply loading it from the buoy. By the 1976 contract, SBM arranged engineering, procurement, and construction of Delta.