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Nexans positions to deliver on cross-sector expertise

July 18th, 2013

French multinational cable manufacturer Nexans (Euronext: NEX) is hoping to use its expertise across the subsea interconnection, offshore wind and oil and gas sectors to grow its underwater cabling business in the coming years and is to potentially build a new submarine cable plant in order to meet demand.

Frédéric Michelland, Senior Corporate Executive Vice President, of Nexans High-Voltage and Underwater Cables Business Group, spoke to Power Engineering International (PEi) in London and said the company was keen to follow up on large projects such as its recent interconnection between Italy and Montenegro in the Mediterranean.

The fast-growing interconnection business currently represents over half of Nexans revenues in submarine cables, what Michelland calls the company’s “bread and butter.” He believes the experience the company has acquired through its involvement in the “highly demanding” oil and gas sector will stand to it when bidding for future projects in other sectors, including an interconnection which would involve the longest cable in Europe if it goes ahead.

“One project people are talking a lot about is the potential interconnection between Norway and Germany, which involves more than 1000 KM of submarine cable plus 500 KM of land cable as well.”

That contract that might be worth $1bn just for the cable and the installation, suspension and converters. We have not received a request for a quotation but it could well come up sometime in 2014, it’s still relatively uncertain.”

The subsea cabling business is responding to demands for longer distance and thicker cables and in general with a $3.9bn market growing by up to 8 per cent a year the company is having to consider the construction of a new plant for submarine power cables in Asia or the US to prepare for expected demand growth and to ease bottlenecks at its existing flagship facility in, Halden Norway.

Frédéric Michelland
The company’s current backlog for underwater power cables represents about $1.6bn, or more than 2 1/2 years’ worth of sales at the division. The strain on existing factories has now stabilized and Nexans is putting measures in place to cope with growth, according to the executive.

Nexans, which is investing $85m to build a land high-voltage cable plant in South Carolina, may decide to add a manufacturing line for underwater power cables at the location to supply North and South American markets, Michelland said.

The company also owns 66 per cent of a venture which makes submarine cables in Japan, and will have to consider adding capacity in Asia at some point.

Being active in all three areas of submarine cabling has, according to Michelland, given the company a highly adaptable quality and also helped to overcome the seemingly eternal problem of regulatory framework instability affecting institutional investment.

“We are in a strong position in all three segments so if we experience any kind of slowdown in any developments, we have the opportunity to counterbalance that by being more active in the other segments.”

Nexans positions itself as a turnkey player in the business and endeavours to take care of not just cable design and manufacture but also to have a hand in all other aspects of installation.

When it comes to the experience the company has picked up in the oil and gas sector, particularly what it has applied in insulation capability, Michelland wants to see the company develop further in showing what it can do in connecting to all possible interfaces that occur in subsea projects, particularly in the offshore wind sector.

More and more you see marine world experts are now going into the offshore wind business having been in the oil and gas area. We have to ask how we can leverage that experience we have in industries like oil and gas?”

“Our change in mind set is to some extent driven initially by the business we have been doing with oil and gas companies who are very demanding customers and really forced us to come up almost every time with a new design and with a new product. They are very demanding in terms of quality control, and we are continuing to grow in that direction in terms of our offshore wind business.”

The Italy-Montenegro project involved laying cable at a depth of 1200 metres, as against the 400m specifications commonly found in the North Sea. The market is demanding that cable is capable of being laid at ever-greater depths and it has prompted a change in the materials the company uses.

“We are moving more towards aluminium conductors instead of copper conductors. In a submarine environment you may have a problem with one cable and on having to lift it there is potential for a total mess. So basically as we go for more and more long length, we need to think about lighter cables and at the same time increase the capacity of current we can conduct which is why we have gone for more and more aluminium, which is 3.3 times lighter than copper.”
Nexans cable
Ultimately it is how the company can innovate in the area of interaction with other subsea equipment that is being seen as the key to future growth.

Michelland believes the company is continually banking the knowledge it needs to justify having a say in the design of the cable in terms of interfaces and so capture more of the value in the value chain while at the same time avoiding being pigeonholed as simply a supplier of cable from A to B.

“We have a chance to influence the interfaces with all the other equipment the cable is connected to, platform connections and all other devices such as substation and converters.”

“You need to optimise all the parameters so that basically you meet the customer’s request in terms of transmission capacity and also create the conditions that are most optimised in terms of making the installation as easy as possible, because everything related to marine installation are usually extremely costly.”

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