Local fabrication, world-class qualityJuly 1, 2021
Domingos Augusto, general manager of Sonamet, talks to The Energy Year about the company’s strategy for maintaining capacity and competing in a challenging market and the opportunities it sees emerging in Angola’s fabrication sector in the coming years. Sonamet is a major Angolan fabricator of structures for oil and gasfields.
Which projects is Sonamet working on today?
Because of all of the gas projects being promoted and incentivised by the government, we are starting a project with Chevron for the fabrication of a lean gas platform for the Sanha Lean Gas Connection (SLGC) project. We are working in a consortium with Subsea 7.
The manufacturing will take place in our Lobito yard. Not long ago, we only had the basic scope, which was a jacket plus associated structures and the topside, but today we have negotiated to manufacture an additional component here called the booster compressor module.
This is part of the government’s strategy to boost local content, and this project was the largest by far awarded to a local fabricator within the last two years.
What were the main reasons behind the award of the SLGC project by Chevron?
We managed to maintain our structure during the pandemic and this is one of reasons Chevron recognised that, one, the infrastructure was intact. We did not sell equipment but maintained it at all costs. And two, we maintained all of our critical employees, those with the experience required to deliver and deploy this challenging project. Also, when we start projects like this, we use the training centre to refresh them on the required activity.
Over these years, our projects have helped to develop our workforce to a level that is comparable to any yard worldwide. We are constantly challenged. For instance, structures fabricated in Sonamet are being compared to the same structures manufactured internationally. We follow the strict requirements of Total and other operators. Our clients, from the operator to the main contractor, have no complaints about our quality because it matches the best in the world outside.
How is the company targeting cost optimisation?
Recently, we looked at the costs of shallow-water projects that we developed in the past, and calculated how much they would have cost today. We could see that we had successfully reduced costs and achieved a huge difference in terms of pricing.
We’ve had to optimise our cost structure over the years. When we started out in this industry, the cost was very high because we were consolidating investments. For example, there was a lot of investment needed to develop the fabrication yard. This was obviously reflected in one’s price.
For the coming years, we have realised that we need to make a small additional investment. We are currently studying that. But today, for the shallow-water component we are quite autonomous. There is little or no investment that we need to incur in order to deliver these projects.
To what extent can Sonamet deliver projects on a turnkey basis?
EPCI providers normally come to us, either to deliver the project in consortium with us, in this case with Subsea 7 or any other similar major EPCI contractors, or to subcontract us for the fabrication part. We don’t venture into engineering because it is much more complex now, and procurement has gotten more complex due to monetary instability and the cost of supplies. We also subcontract a lot of services, such as the electrical instrumentation and industrial painting.
In what type of project do you have the most experience?
Sonamet is one of the best for delivering on shallow-water projects, including both jackets and topsides. We have delivered some major projects for Chevron, which has been at the forefront of Angola’s shallow-water projects. Sonamet has also accumulated a vast experience in subsea production systems and SURF projects.
What were Sonamet’s main achievements during the challenging year of 2020?
In a consortium with Subsea 7, we managed to finish providing EPCI for the subsea flowlines and umbilicals at Total E&P Angola’s Zinia Phase 2 project without any major interruption. We were also awarded the local subsea package for Total’s Dalia Phase 3.
Also in the midst of the pandemic, we were contracted together with TechnipFMC for a subsea project in the CLOV 2 Plus development to fabricate a valve module, SUT and foundation. We are delivering them without interruption as we’ve taken very strict measures in order not to slow or disrupt the project in a perfectly safe environment.
How did the crisis impact the company’s output?
We took on a lot of investments to maintain, at our own expense, the people who have developed a great deal of knowledge and know-how. We didn’t have the projects to maintain these people. So, one can imagine having the exercise of reducing one’s costs and at the same time having to maintain the workforce.
The number of people we train per year in the market is around 200 welders and 200 pipefitters. During the pandemic we had to temporarily shut down our training centre because there isn’t a proportional demand for work. For instance, in 2013, we were delivering 3.2 million man-hours per year. There was a point in time in the past three years when we were struggling to reach 300,000 man-hours per year.
We still deliver major projects though, including SPS Kaombo with Aker, for Total E&P Angola. We are reaching completion, and just delivering the jumpers.
What do you expect the next five years to be like for the domestic fabrication sector?
The coming years are looking quite positive. Our prospects for the next five years involve having a lot of work to feed us, doing SURF and subsea packages, tie-ins and tie-backs and similar projects.
One important point is that for the coming five years, the government is paying more attention to civil engineering structures versus the local capacity of the overall industry to deliver such projects, specially steel infrastructures, so we expect to see opportunities in this area.
The overall capacity of the country is around 8 million man-hours per year. The problem is that the country doesn’t have work for those 8 million man-hours. So we have an excess of capacity in the country that could be utilised for doing more projects.
Our idea today is to look at the overall market and try to identify some infrastructure that we could build, maybe not to install it or do the engineering per se, but to do the fabrication, for instance.
What are the pillars of Sonamet’s business strategy?
Efficiency and pricing are what we look at for the long term. The idea is to maintain efficiency as the core, and that is part of Sonamet’s action plan. One can decide to decrease costs but one has to take action to get there. What differentiates us at the end of the day in the international market is the operational cost.
For projects like Zinia Phase 2, we partner with other companies. We bid in a consortium in order to improve our cost base for the project and we’re doing the same for other major projects. This is the future.
Also, early engagement is key in this industry. It is the most important thing. We usually allocate a dedicated team to a project even before it starts to ensure we are involved in the early stages.