DNV GL has strengthened its long-standing expertise in technical due diligence by establishing new global hubs in London and Oslo in 2015. Supported by expert teams globally, the hubs provide technical, environmental and commercial due diligence for organisations planning to invest in, lend to and divest oil and gas projects and assets.
“Our role in the due diligence process is to support companies with technical investigations or audits prior to an investment, divesture or capital project financing transaction,” says Viken Chinien, head of due diligence in London.
“We confirm that the material facts are correct and identify gaps, reducing the financial risk and probability of unnecessary harm to either party or entity involved in a project or transaction.”
In the marine industry, the company’s Noble Denton marine advisory service area provides technical due diligence for projects and assets across the oil and gas value chain. This includes drilling, construction, field development, production and operational support.
Supporting project financing
“Quality issues and delays can spell disaster for a project, so we work to protect our customers’ interests by identifying and overcoming potential pitfalls,” says John Tate, director for due diligence at DNV GL’s Noble Denton marine advisory service area.
“We provide support by keeping them aware of risks, expected final costs and delivery expectations through monitoring initial assumptions and ongoing performance.”
Project technical due diligence in the marine sector generally begins with DNV GL’s experts reviewing the project background, the asset requirements involved and the operational area(s) proposed.
In many cases this will include confirmation of the local meteorological and oceanographic (metocean) data and geotechnical conditions. The proposed unit design parameters, completeness of the specifications and the equipment suppliers are also reviewed.
“A key part of our service is to advise customers on the appropriate controls and/or contingency allowance, especially for complex offshore oil and gas projects,” Tate explains.
This includes providing independent advice on how to mitigate risks and, in some cases, monitoring the implementation of remedial work.
“In the offshore oil and gas sector, the bulk of new projects are still predominantly in the ‘Golden Triangle’ of Gulf of Mexico, Brazil and West Africa,” says Tate. But key smaller developments are taking place globally.
Increasingly there is a demand for local involvement in projects, and this requires experience on the ground, backed by a global presence. DNV GL is one of the few due diligence specialists that can offer this footprint: “With technical due diligence expertise in key offshore markets like Oslo, London, Paris, Dubai, Houston, New York and Singapore, we can offer technical advice from Europe and the Americas, and yard attendance from Singapore,” Chinien explains.
“This enables us to offer our customers not only an impartial set of eyes with which to examine a project, but a sounding board for ideas and, where necessary, a hammer to support appropriate initiatives and help push them through.”
Asset due diligence
Operators looking to acquire and divest assets, as part of a merger or acquisition, also need specialist support. Here, the purchasing company will also need to face the additional challenge of time constraints.
“Typically, due diligence for project financing will take place over several years, supporting a project from concept to operation,” explains Chinien. “However, asset deals can be completed in a matter of weeks. That requires a different approach when it comes to timing and process.”
It also depends on the input of highly experienced technical specialists. “The purchasing party requires opinions on the technical condition of an asset, and its commercial viability and future operating costs, within tight timeframes,” he adds.
“This requires the skill of experts in specific technical fields, who are able to use their experience to provide informed advice. Being able to leverage the whole of DNV GL’s extensive and global technical team is very important to fulfilling this need.”
Focusing on the environment
Increasingly, DNV GL’s due diligence work includes environmental as well as project and asset risk: “There is an increased focus from financiers, the public and governmental regulatory agencies on environmental and societal risk,” says Chinien.
“This can be overlooked by some operators, who tend to focus more on the technical and commercial aspect of a project or asset. To resolve this, an independent and specialist assessment of where socio-environmental risk factors lie is essential. It’s something that we are able to provide based on our experience in this area.”