Vienco Group – from rocks to refinery

His track record over the last decade confirms that Richard Selwa, chairman of Aberdeen-based Vienco Group Ltd, has nailed his colours very firmly to the mast of internationalisation. Vienco (derived from “virtual energy company”) is a streamlined group of specialist companies which comprise a mix of oilfield development service providers and innovative new technology developers.

Richard believes passionately in “vision” (“although it has taken me many years to understand the word”), and has an innate distrust of simply “following the herd”. A methodical business strategist, he has worked in at least 45 countries and currently oversees Vienco companies based in Norway, Colombia and, most recently, Canada.

At present, the Vienco Group has two established international businesses with a third in the process of being set up in North America. Altra Energy is a well-established process and safety engineering consultancy with bases in Aberdeen and Stavanger which has carried out over 1700 projects worldwide for oilfield operating companies.

Oilflow Solutions is a joint-venture company owned equally by the Vienco Group and AGT Energy which has developed a unique water-based technology called Proflux that reduces the viscosity of heavy and waxy oils, allowing them to be produced and transported like conventional oils.

(Heavy oils make up about 15% of the world’s remaining oil reserves (about 5-7 trillion barrels, with the main concentrations in Canada, Venezuela and the Middle East) but they are more difficult and more expensive to produce than conventional oils.) As reserves of conventional oil deplete, the search is on for new technologies to realise the value of heavy oil reserves.

The Proflux system is currently being tested on heavy oils around the world, and Vienco has ambitious plans to set up a new joint venture company in North America in 2007 to start deploying the new technology in earnest in Alberta’s abundant heavy oil fields.

Assessing the market

Richard is very encouraging of growth through geographical expansion. “There are basically two routes to business diversification – by product or by geographic territory,” he notes. “Conventional MBA wisdom, I know, says that product diversification is generally the slightly easier route – but, in my experience, that’s not really the case in the current oil and gas business.”

“I have personally found that the oil industry is actually kinder, more lenient to geographic expansion – but the key is in assessing and selecting the appropriate overseas market to attack.”

Richard has spent the best part of a decade developing a very personal, highly strategic approach to developing overseas business. While stressing that this approach is what works for him, he very generously agreed to share his thoughts on the topic with exportlink readers.

Click here to visit the Vienco Group website

The Vienco standard hunting pattern!

“My early training with US engineering giant Bechtel has stood me in very good stead. The Bechtel approach to overseas development was very analytical, calling for about nine months of homework up-front but it’s a process that doesn’t fail!

Having said all of which, it has taken twelve years and three companies for the Vienco hunting pattern to evolve! It’s all about learning to use every market evaluation tool in the toolbox – and there are probably many more than you imagine.

Vienco has always taken this highly strategic approach, largely because we have serious investors who have supported us in every stage of our growth and they are quite properly looking for spectacular results at the end of the day. But much of what follows may equally be of value to an SME looking to take its first steps in developing overseas business.

First of all, you’ve got to do the desk research to convince yourself that your target market actually has the potential for you, and if need be to quantify your first instincts.

I know many people would then say the next step is to go out on a supported trade mission to your target country to do some in-market research – but in my book you may be missing out on a much more accessible source of information.

Local knowledge

Here in the UK, and especially in Aberdeen for oil and gas, we have a fantastic asset in really knowledgeable, well-connected people working in economic development with the local councils, Scottish Enterprise and the Chamber of Commerce.

I suggest you go and pick their brains and look for contacts – you’ll be amazed at the quality of up-to-date info you can glean right on your doorstep. They may well also be able to set you up with an introduction to their counterparts in economic development in other countries, who can make invaluable introductions for you.

Once you feel you understand the market in this way, you are probably ready for your first in-market visit – and I suggest you go out with a template of questions and no intention of selling at this early stage!

Go and see a spread of people, always starting with local British Embassy people who really know the market. Tell them “this is what I’m here to do – set the scene for me” and invite them to alert you to any important local issues which may influence your plans.

Asking the right questions

Whenever possible, I try to allow a week and a half for my first in-market visit. I go and talk with a wide cross-section of oil companies – major, mid-size and minor – then service companies, then potential competitors, along with other well-informed sources like local universities.

There is absolutely no selling in this process – it’s all about my asking relevant questions – “here is my business, what do you think? how should it behave? what should it look like? should I bring out my own people or should I localise?”

From all these snapshots, you should build up very good picture of the potential project.

You may well make a second or third visit, being careful and methodical in building up your understanding of the market. At this stage, you are still firmly in research, rather than sales mode but by now I tend to be saying to potential customers – “we now know what we need to know, we are going away to work on how we can position ourselves for successful market entry, and if we are going to do it properly and commit, I’ll be back in three or four months to see you.”

Support for market entry

By this stage, you may be ready to engage on-ground help for market entry. For Canada, we used one of the global accountancy practices because we felt they had high-calibre people with hands-on experience of the Canadian energy market who could underwrite our understanding of the market.

This is, admittedly, the expensive way to do things – but what we are planning to do in Canada is so significant that we really needed that extra edge. As it turned out, our advisers more than earned their corn – they told us very bluntly that our original entry plan, based on an oilfield service-based model, wouldn’t work, and that we would have to commit instead as a non-operated oil development company with a distinctive technology edge.

We have raised a lot of money to go to Canada so we have got to know that we are there for all the right reasons; we have got to understand the whole picture. And it takes a lot of hard work before the mists start to clear – maybe up to five market visits. With Canada, I’ve made eleven two-week trips, but that is exceptional.

The next stage with Canada during 2007 is going to be seriously exciting – moving from what’s on the board to actually putting the deals in place.”