Focus on the GCCSeptember 10, 2020
Alaa Khaled, Rosetti Marino’s regional manager for the GCC, talks to The Energy Year about how Covid-19 and the oil price are affecting companies and developments in the GCC and which markets remain the most attractive. Rosetti Marino Group an Italian offshore contractor providing engineering, procurement, construction, installation and commissioning (EPCIC).
How have your activities been affected by the dual shock of the oil price drop and the pandemic?
This crisis is different from the usual decreases we see in the market volume – in availability of jobs, opportunities or developments. It has impacted day-to-day operations as well. We are an EPC contractor so we are engaged in operational activities such as in yards, offshore vessels or brownfield modifications on offshore platforms. The supply chain and work processes have been deeply affected by Covid-19, so all of these sections of the business have been impacted.
Regarding opportunities, there has of course been an impact on the annual budget of the end users. There has been a sudden shock and budgets have been decreased by up to 50%. We had to work hard to pick up the pace of the change to adapt to it in our own organisation in order to prepare for the coming period, all while maintaining maximum safety for our employees. Meanwhile, the pricing aspect has been suffering with an increase of costs due to Covid-19.
So the challenges are from all sides but you have to address them one by one. We took the protection of our people – which means our experience and our resources – as top-priority and we did our best to protect them in terms of health, safety and job security. In the yards globally, we have put in every effort to continue to deliver the projects to the end users despite the restrictions.
Would the USD 40 barrel price be sufficient for GCC countries to start new developments?
The numbers for oil price per barrel that we see right now are due to cuts in production and result in cuts to the companies’ overall budgets. So simply surviving the impact is not sufficient because a USD 40 barrel price means there will be no new developments. There will be less expenditure on greenfields. Some activity will be sustained in brownfield developments or refurbishing existing facilities. We are waiting for the increase to USD 60 per barrel.
Going forward, the focus of the oil and gas market will be mainly in the Gulf region. The North Sea opportunities are decreasing drastically. The wind opportunity there is ongoing, but in other areas the cost of production is much higher than the price. Still, the GCC is the prime focus market of the oil and gas industry.
What are the current opportunities to enhance your capabilities in light of your partnership with Ali & Sons Marine Engineering Factory in the UAE?
We are of course utilising the joint capabilities of both partners. Currently, we are trying to enhance the channels of inputs for the members of both companies. We are still in the early stages as this partnership just started in January.
We are thinking of launching our services in a different way in line with the changes associated with Covid-19 which are set in place. We are working on different aspects of the process together with ADNOC. Meanwhile we are continuing to pursue our opportunities and our targeted tenders are being worked on all across the globe. Different centres are connected all over the cloud or Zoom.
We attended meetings with several partners and clients using these communication platforms and people began to realise that this is the only way to do business.
What are your expectations for this alliance regarding coping with fierce competition?
We envision having a very good chance to compete. However, it is still early to analyse the full impact of Covid-19 plus the outcome of the new joint venture. Still, we are targeting further consolidation, complying with the commitment of the UAE government to focus on the local companies and local contribution to the economy. We think of this as a consolidation of our position in the market with a mix between Rosetti Marino’s lengthy experience in the global market and our partner’s capabilities.
Where do you see the most opportunities in a post-Covid-19 era in the GCC region?
The GCC continues to be the most attractive market in the world and our Group is focusing on developing its presence in the region.
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