Cost effective to compete

Angola

Ricardo Do Amaral, general manager of Octomar, talks to The Energy Year about the importance of developing a local workforce and the latest on the company’s strategy for growth in Angola and the region. Octomar is an Angolan diving and marine services company offering a variety of offshore tanker terminal and FPSO support services, marine and subsea services and vessels.

What is Octomar’s core business and how does the company rank against the competition?
Our core business is subsea services, but we also provide pilots, mooring masters and tanker teams to support offloading operations from FPSOs to tankers and we provide vessels such as anchor handling tug and supply vessels and line handlers to assist in the berthing of tankers on CALM buoys and tandem mooring operations. In the diving market sector, we are the market leader with a market share of about 50%.

Has the pandemic brought new lessons regarding the importance of local content?
We learned from the pandemic that companies based in Angola can continue operating without expatriates. I believe this was an eye-opener and has been an advantage of having companies present in Angola that could identify and develop these local resources.
A lot of expatriates left Angola because of companies’ downsizing and reducing costs, and due to the cancellation of projects. As a result, we and other companies in the industry needed to employ Angolans and to invest in local human resources. That approach has proven to be successful for many companies, providing Angolans with training and support to ensure that they fulfilled those tasks that were previously fulfilled by expatriates. We have programmes for in-house training and institutions in Europe and South Africa that we’ve relied on for online training.
Although unemployment in Angola is very high, the oil and gas industry today is more Angolanised than it was before the pandemic.

How did Octomar ensure business continuity during the crisis?
Within our company, the first priorities were to ensure that we remained operational, keeping the personnel healthy, and to maintain the efficiency of the company. We successfully managed to structure the company to continue operations by working remotely, from management right up to the administrative, logistics and operations departments. In doing so, we ensured the company was well prepared for this new challenge and prevented any interruptions to our operations.

How did the pandemic affect the company’s projects and business strategy?
In our largest long-term project, the client decided to interrupt the offshore operation in March 2020 to minimise costs and to realign their offshore operations because of the uncertainty with the crew changes of offshore personnel. This project involves the regular subsea inspection and maintenance of production facilities, which together account for approximately 50% of Angola’s oil production. Fortunately, in September, our client restarted the offshore operation, which meant we could remobilise personnel to resume our offshore operations under this project.
This long-term contract project provided constant monthly revenues, which were lost during the interruption to the offshore operation. As a result, we had to take some measures to reduce costs and to manage our cashflow, by renegotiating payments terms and contractual conditions under existing contracts with our stakeholders and suppliers and therefore, optimising our costs and avoiding any negative cashflows. Additionally, we had to contain costs with freezing maintenance and servicing of some of our assets that were not on any project or operations.
In a nutshell, these were the decisions we made right at the start of the pandemic to ensure that today we are still operational.

How did the company manage to keep its project personnel on board?
When you have an interruption, there is the risk of losing freelance project personnel, hence to keep the turnover of personnel to a minimum was challenging. We had to come up with incentives, such as assisting with career development training with the key personnel, to ensure that we retained these personnel for when the operations resumed.

What do you expect in terms of capturing new business for 2021?
We want to win back the clients we lost and therefore regain our market share. There is a new dynamic in our industry, with new tenders being launched for projects that require vessels, subsea and other marine services. The big challenge now is to remain cost effective operationally to be competitive.
One of our targets is to maximise the utilisation of our assets, equipment and vessels, and generate revenue and ensure that we don’t have a surge in maintenance costs. It is very costly to restart the operation of heavy equipment, especially vessels, that has been idling for too long as a result of any downturn.
The strategy is to tackle the market aggressively, not only in competitive terms, but also in ensuring that our operation remains as efficient as before and during the pandemic, as well as identifying and securing opportunities in other market sectors.

Will the development of downstream projects propel the demand for marine services?
The new refinery project in Cabinda may well require maritime transport of cargo and materials. The Dande offshore terminal projects will provide a demand for marine and subsea services.

What’s the latest on the company’s plans to provide services regionally?
Our focus is to consolidate our position in Angola, where we have our base and organisation structure. The next phase is to replicate our business model in Mozambique, where we have already laid the ground with the successful registration of our affiliate company, M-octo. M-octo has undergone vendor registration processes with most of the stakeholders in the oil and gas industry in Mozambique and is actively participating in tenders for future potential projects.

What are the company’s long-term objectives?
The first objective is to continue our growth, to ensure Octomar remains the leader in the diving market sector in Angola for the next five years. Moreover, we see ourselves not only as a diving company but also as a vessel operating company. As an Angolan company, we can play a bigger role by investing in the acquisition of new fast crew vessels, which require less capital and investment outlay than the larger vessels such as tugs and supply vessels. We believe that our experience, organisational structure and track record in managing fast crew vessels give us a strong base to manage a larger fleet of this type of vessel.
Looking ahead five years from now, our objective is to enhance the structure of the company to operate and manage a larger fleet of vessels.

Read our latest insights on:

• Angola
• Mozambique