A strategy for expanding services in AngolaSeptember 19, 2022
Alan Glyn-Cuthbert, operations manager of Petrowork Solution, talks to The Energy Year about the company’s strategy for expanding the scope of its clientele and value-adding services, as well as trends in the demand for maintenance and tank cleaning. Petrowork Solution is an Angolan services company providing diverse support to the oil and gas sector.
What are the newest steps in Petrowork’s growth strategy?
At the moment, we’re rolling out ambitious expansion plans. We’ve acquired a 5,000-square-metre covered warehouse open space, which will triple our warehousing and workshop capacity in Viana. We aim to have this new base operational by the end of 2022. Our physical footprint will triple, which will also enhance our capacity to sell our services.
We have also developed new partnerships. The biggest one is with a UK company called ICR, a global provider of specialist maintenance, integrity and inspection solutions. ICR is involved in very niche and critical services. The partnership entails the provision of composite wrapping and weldless installation of flanges. We already had expertise around these technologies, but this new partnership boosted our exposure to the operator level of clientele.
Has the demand for associated services such as tank cleaning risen in recent months?
We see a combination of trends: there is a demand surge, as well as a reorganisation of availability of local services. The strength of different players changed due to the crisis – some for the better and some for the worse.
We are still a small company; we are still developing ourselves. Our client portfolio has remained stable, but we’ve increased the scope of work for some companies quite well, particularly through our cleaning services line for tanks and process vessels. This has been a big part of our activity in the last 18 months. We tried to find our niche, and we found some good landing areas, particularly in the tank cleaning area and in providing composite wrapping and flange repairs through our ICR partnership.
What advantages do the ICR weldless connections bring to the table?
The weldless connections are in the same family as the composite repairs. We perform cold repairs on piping that wouldn’t normally have been treated in situ. In order to do in-situ maintenance of these pipes, the other options are hot techniques of repair, which are costlier and more dangerous.
ICR’s Quickflange is a mechanical service in which we achieve the same objective by repairing compromised pipes in situ. To provide a technical service, our teams need to be knowledgeable in the principles of pipe fitting and the composition of the materials that we are working with. This has compelled us to augment our workforce with some highly skilled technicians to control this and to increase the know-how of our own staff.
How does the maturity of Angolan assets affect the demand for maintenance?
Some aspects of maintenance haven’t been done over the last two years. Companies like us have been on the back burner, or not involved directly in production. Operators didn’t have space for us offshore due to Covid-19 regulations. So now that production is ramping up again and regulations are relaxed, it’s a big opportunity. Our added value is refurbishment and maintenance, so clients are calling us because they have corroded pipes or age-related stress on the assets.
Aside from the maintenance and the tank cleaning, have there been any other improvements in the market?
PTFE coatings are another of our specialist lines. We work with a brand called Xylan. It works as a dry lubricant, corrosion protection and has specific functions in the operation of downhole tubes and protection for fasteners, among others. For service providers such as those providing downhole tools, this coating is critical to their function.
Since the beginning of Covid-19, we’ve made big steps towards clients’ qualifications and targeted high-profile projects, which so far have given us positive results. These are very specialised applications, so it’s not easy to qualify for this kind of work. We are developing trust with these service providers and their clients. For example, some of these service providers bring the operator to our base to verify our capacity, our resources and our ability to fulfil these services.
Does qualifying for such a specific service open the door to providing other less-specific ones?
It gives our company exposure to a bigger market. For example, there are a lot of companies doing coatings – competition is high in this segment. While we are opening a door to do something very specific, we’re also finding that this gives us access to business where before we were just one of many competitors. Our clients’ perception of us changes, as a company that can provide superior-quality services in one aspect can be perceived superior in other less-specialised areas.
What were the main challenges of training manpower during the last year?
We have been successful in having in-house workforce development on a middle management project level. We look for people with a degree, who might not have oil and gas field experience, and put them in an internal training programme similar to an apprenticeship programme. Once we identify their capacity to perform, we pass on some responsibilities. We’re aggressively pursuing this since we need these competencies to back up our expansion plans.
What are the still-existing challenges in applying the new local content legal framework?
It’s still a work in progress. Companies always find a way around the regulations. We know, for example, that when a company like ours competes in a tender, we need to be considered within local content – not only to be competitive, but cost-wise we need to do the job with Angolan workers.
In terms of procurement of goods, it’s difficult to say because most of the materials we use are specialist materials, which will not be manufactured here for the foreseeable future. On procurement of daily needs, one of the situations we’re facing is that it’s becoming extremely expensive to buy things locally again because of the exchange rate over the last few months.
How has the recent kwanza appreciation affected the financial situation of service providers?
Most contracts were negotiated with a dollar costing AOA 650, which nowadays generates up to 30% losses from the kwanza appreciation. On top of that salaries are skyrocketing. Unfortunately, the kwanza appreciation has made daily consumables and salaries extremely expensive.
Cashflow is one of the biggest challenges that we have operationally at the moment. It’s a positive aspect to have access to opportunities inside the operator level, or second-tier companies. But it’s a tough game to be able to sustain this and run a company day to day when payments don’t come in time.
In 2016, the government forbade payments between companies in dollars or euros. With the current economic situation, there is very little kwanza on the street and in the banks. So, clients cannot pay in dollars, and they don’t have enough kwanzas to pay all the suppliers, which creates a financial bottleneck that particularly affects service providers like us.
I think they need to find a middle way, such as allowing payments in which 60% is in kwanza and 40% is in US dollars. They could even require that this forex be used to pay for expat fees and imports so that the value stays in-country.