A strategy for sustainabilityOctober 25, 2022
Alberto Figueiredo, CEO of Operatec, talks to The Energy Year about how the company built a strategy for sustainability after the 2014 oil crisis, its approach to partnerships and the latest developments in its training facility. Operatec provides services to Angola’s subsea oil and gas sector.
How did the past oil crisis reshape the company’s strategy for sustainability?
After the 2014 crisis, our yearly revenue shrank from USD 60 million to USD 15 million. Around 2014, when Operatec’s focus was manpower provision, we had about 400 people employed between expats and Angolans, working on the manpower provision, drilling completion, subsea releases and more. Manpower was a good business with big revenue. You acted like a finance company that intermediated employment for other companies. But when you have some instability in the market, the first segment to shrink is manpower. And this is what happened after the 2014 crisis. By 2016, we went from 400 employees to just seven.
But the good news is that this experience made us invest in segments that gave us more stability, such as training and subsea services provision. The reorganisation of the company already started in 2021.
In terms of training, we have a centre in Cabinda to cover the north of the country. We have fitted Luanda with an OMITC [Operatec Maritime and Industrial Training Center] Academy. In broad terms, Operatec is expanding its subsea services capacities, looking to one day transform into an EPC contractor for subsea systems. Our subsidiaries are working to solidify and expand their procurement and fabrication capacities as well.
What is Operatec’s strategy for becoming more involved in the subsea services segment?
We have been challenged by Chevron, our main customer in this segment, to expand our subsea services capacities. Our strategy is now to transform Operatec into a full-fledged subsea services company focused on the installation, repair and maintenance of subsea systems.
At the moment, we are installing 10 kilometres of cable for a Chevron project. Last year, we finished 10 kilometres of flexible pipe installation in Block 0. We had success on these, which is why we are confident that we can work in these segments. Chevron’s licence extension in Block 0 influenced our decision to grow in the subsea installation business.
What is the company’s approach to partnerships while stepping up its subsea services offering?
We aim to make a consortium of companies. We are looking to partner with companies to further develop our engineering capabilities because this is one of the gaps that we have. Right now, we have to subcontract the service of engineering.
We recently signed a co-operation contract with a Dubai-based company which assembles equipment for higher-diving saturations. We are also negotiating with global vessel manufacturers and ship owners to purchase a permanent fleet of vessels for our projects.
What is the current state of the company’s subsidiaries JAMI Yard and Angola Oilfield Supply Services (AOSS)?
At the moment, the yard is focused on providing maintenance services and doing small fabrication projects. However, we have a strategy to transition to large-scale fabrications and compete with Angola’s biggest fabrication yards. We are investing in equipment, recruitment and training to get there.
AOSS is still stable despite the procurement segment being truly unstable these days. We are working with our main client, Chevron, to evaluate how to improve the procurement process under the current global conditions.
How are global trends affecting the procurement segment?
The Covid-19 pandemic, the war with Ukraine and the energetic crisis for rising prices of fuel, as a mix of events, affected the price of shipping and freight forwarding too. The same containers and routes that cost USD 6,000 in 2019 now cost USD 20,000. Aside from price, vessel and container availability is unstable as well.
The main issue though is price stability. From the moment we provide a quotation to the moment the client accepts it, which can take 15-30 days, the logistics service providers change their initial prices.
How are payment terms affecting the cashflow of local companies?
Local companies are currently funding the operators and other big companies by taking projects under disadvantageous payment terms. 60-day payment terms are killing these local companies. These don’t always take 60 days either – we have seen them take up to 120 days. For example, in the procurements business, we buy equipment or materials abroad and have 30-45 days to ship that equipment into Angola. We then have another 15 days for the Customs clearance and other processes. Then, we deliver the equipment to the customer here, and only then do we invoice. From that moment, the 60 days start counting. So if you put this all together, it will be 90 or 120 days from the moment a company makes the expense until it gets paid.
What could be a solution to this situation?
We should all go back to 30 days. Back in 2007 when Operatec was opened for business, we were being paid in 15 days. Sometimes we were paid in advance! We don’t understand the reason why the operators changed payment terms from 30 to 60 days.
But now, it seems that the operators and the service companies are not partners. It’s bad, and it is killing many companies. It’s difficult to understand why local companies were forced to accept these kinds of terms and conditions.
What is the latest news on the Operatec Academy business segment?
We offer offshore industrial and maritime survival training and operate as a training facility recognised by OPITO [Offshore Petroleum Industry Training Organisation], STCW [International Convention on Standards of Training, Certification and Watchkeeping] and ROSPA [Royal Society for the Prevention of Accidents] (UK) for oil and gas service companies and independent personnel. Based on the success of the Cabinda training centre, in 2022 we inaugurated our OMITC Academy in Sequele, Luanda. We are providing world-class training to the service companies and operators here. In Sequele, we have 19 classrooms and the capacity of the Academy is about 300 students per period.
Our goal is to create a closer and more reliable relationship with leading suppliers in the maritime oil and gas industry, delivering better value for money through geographic expansion and using innovation to expand our portfolio of training service solutions.
What kind of courses is the new facility offering?
We had the OPITO certification for our training facility in Cabinda, and now we are processing a full OPITO certification for both of our facilities at the same time. We have required the quality because our courses are designed and provided under both OPITO and STCW standards.
Once we finalise our certifications, we will expand the OPITO courses. Aside from BOSIET, we will have confined spaces and other courses that we can provide under the OPITO umbrella.
What are the main advantages clients can enjoy by choosing OMITC Academy?
We have contracts with most operators, such as Chevron, BP, ExxonMobil and TotalEnergies. We are now finishing the negotiations with Eni. Then we have service companies such as Schlumberger, Halliburton, Baker, <a href='https://theenergyyear.com/companies-institutions/petromar/’>Petromar and others.
The companies that have decided to train their employees here get the same quality that they could get if they were to send them to South Africa, Dubai or elsewhere. Workers coming for training can stay in our facility’s four-room apartments, which include leisure areas, a pool and more.
The advantage of using our in-country training facility is that it reduces costs. They don’t need to pay in dollars or euros. They reduce costs with travel and accommodation.
Is the new academy compliant with the new local content requirements for training facilities?
The new Angolanisation law states that training is to be provided by local companies. Of the 12 instructors that we have now, we have only one expat. We are selecting Angolans to send abroad to Dubai or the UK to be trained as trainers on OPITO standards, who will then come back and work here.
Do you expect to cater to the needs of regional countries?
Our focus is to cover Angola. But ultimately, we are looking at covering the region as we grow. We have recently been invited by a Botswana-based company, since the country recently discovered oil, to go there to train about 100 employees. There is a market for these regions where people normally attend trainings in South Africa. Sometimes, we are invited to go to Mozambique and São Tomé.