Competition in Oman’s services sectorMarch 6, 2020
Ahmed Al Daraai, executive director of SANTCO, talks to TOGY about challenges facing Oman’s services sector, what the coming rise in activity means for local services entities and advice on remaining competitive. SANTCO provides logistics services and transportation for the downstream sector.
Could you give us an overview of SANTCO’s operations?
SANTCO has been pioneering LCCs working alongside PDO since 2000 in Oman. As of today, we are the LCC contractors for Al Maha within PDO’s concession area. We bring diesel from OQ to Muscat with our own tanker vehicles and distribute it to filling stations. We operate with four filling stations for Al Maha and provide them with 12 tankers. The capacity of our tankers starts at 2,000 gallons [7,570 litres] and goes up to 8,000 gallons [30,280 litres].
We are planning to expand our fleet by 10-15% in the coming months. We are waiting for the contract with PDO. Once it is signed, we will increase our fleet. Right now, we have 20 diesel tankers in total.
We also provide waste management and transportation services for Weatherford, Gulf Energy and KCA Deutag. Furthermore, we have sand suckers working for Daleel. We also supply diesel to 10-15 rigs for Weatherford, Schlumberger and BP.
In terms of technology, we have made a large investment in JCB construction and earthmoving equipment. We have one super sucker that we recently sourced from India. It is more efficient and allows us to operate without requiring our JCB assets. We are the only company in Oman to have this.
What changes could be made to the current regulatory framework in order to support growth?
The current regulatory framework is fine. The problem is that the market has slowed down and there is a need for jobs. The government must support locals. As an LCC [local community contractor], we have the required investment, manpower and quality of services. However, the decrease in prices has impacted the sector since companies no longer look at certifications and minimum safety requirements. Lower investments affect the final price. We must look at costs, which is where we are suffering.
There should be specifications in the regulations about how companies choose their contractor. We need to differentiate the quality of services. Anyone can do business with low-investment procedures and equipment, but it will not be done in the same way. Everyone must rise to a certain level of quality for the industry to remain stable.
What does the upsurge in activity in Oman mean for smaller services companies?
In Duqm, it will allow regional companies to be involved in some needed services. There are enough companies to cover this area and there is plenty of business. The government wants to help locals. If they do not, we are ready to do it anyway. We have the capabilities.
The market is going to boom. We are preparing for that. There will be more jobs and contracts to come. Some tenders will launch in 2020, and these will increase logistics requirements.
How would you assess competition among local services suppliers?
Competition is very tough. In the beginning, it was focused on quality of services. However, quality is no longer considered as much as price. This is a large shift. As a local community contractor, we are well qualified since we have all ISO safety certifications. With PDO, we recently achieved 20 years without any lost-time injuries.
What business practices need to be followed in order to be a leader in Oman’s oil and gas industry?
The most important characteristic is to deliver on time. Companies work with us because we are punctual and often deliver before the product is due. If they want something delivered in two days, we can often give it in one. Additionally, we provide proper safety and quality standards. These factors are the reasons we are among the leading companies in our sector. We have been operating in the market this way for many years.
When it comes to our manpower, we do everything as per PDO’s requirements. They have a lot of processes that require the training of drivers or supervisors. In terms of chemical handling, we decant chemicals. This is very dangerous and requires us to go through proper training processes. Initially, we train our staff in-house. For work requirements, we send them to third-party institutions, mainly NTI [National Training Institute].
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