Maritime expansion

Egypt

Marwan Haridy El Shazly, marketing and contracts manager of Pan Marine Group, talks to TOGY about trends in Egypt’s marine petroleum services sector, the challenges and opportunities in lowering sulphur content, and competition in the market. Pan Marine Group provides shipping, logistics and petroleum services.

What are the latest trends in Egypt’s marine petroleum services sector?
The industry is moving towards big PSVs with diesel electric engines to make sure they decrease fuel consumption while having larger cargo capacities. This is because they are drilling deeper in the Mediterranean, which takes longer. That’s the main development in drilling. They are not new designs, but PSVs with over 850 square metres are becoming a favourite design in Egypt.

How is Egypt advancing in terms of the International Maritime Organization’s new regulations on sulphur content in fuel?
That’s a difficult question because up until now we haven’t applied those sulphur regulations in Egypt. The IMO is even thinking about putting stronger regulations in place. We should do something about this urgently, because due to this we cannot support bunkering in the Suez Canal – or bunkering in any ports. There is only one port in Egypt that has low-sulphur regulations, the Suez Port.
That’s why if you compare the number of vessels passing through the Suez Canal with other canals, such as Panama, we have some of the lowest bunkering volumes in the world, while also having one of the highest numbers of vessels passing. We don’t provide low-sulphur fuel and don’t have good barges. This area needs a lot of investment. It’s a challenge, but it’s also an opportunity.

How would you describe the competition in Egypt? Is there room for more players?
In terms of OSVs and rigs, Egypt is by far the biggest market in the Mediterranean region. All the major vessel operators are working in Egypt; it’s a massive market. It’s also interesting for North Sea vessel owners, because they don’t have that many operations during the winter. Egypt is about 14 days’ sailing from Aberdeen, so those vessels come and operate during the winter, and then they go back in the summer to the North Sea when the rates are high and there are more activities.
The biggest construction project in the Mediterranean is Zohr, where Saipem is currently undertaking phase two. There is a lot of pipelaying. There are also other mega-projects: BP is operating in the West Nile Delta, Subsea 7 is working with Pharaonic Petroleum Company and there are a couple of other well-known projects taking place. For a vessel owner, there is a lot of work here in Egypt.

How is the sector adapting to become more cost effective?
Indeed, there is a trend of cutting costs as everyone tries to cope with lower oil prices. We can see new ways of doing maintenance and cutting opex. All over the world, we see how companies are getting involved in innovative ways to decrease their costs.
For example, one of our vessel owners just built six vessels – one of them is coming here to start a job in May – and they have a hybrid battery that will decrease consumption by 30%. This is an asset that you invest in once and that will work for five years without maintenance. There are also new technologies being applied: rig owners are installing solar panels, for example. You can see a lot of vessel and rig owners trying to decrease the end-client costs.

How is Pan Marine Group preparing for the increase in activity in both the Mediterranean and Red seas?
We just got our first pipelaying job in the Red Sea, for 70 kilometres, and it includes extra scope for installing the helideck, flare changing and replacement, etc. We have been opening new branches and hiring more people, and the number of vessels is growing.
We have a lot of new people coming in to support this expansion and it’s getting busier in terms of drilling, projects, EPIC, etc. ExxonMobil was just awarded an oil and gas concession, and that’s interesting because it’s the first upstream concession for them in Egypt. Previously, they were only engaged in downstream activity. Egypt is getting busier and busier.

Do you provide one-stop shop services?
We operate as a one-stop service provider as we usually use all of our companies to serve our clients. We are expanding horizontally, not vertically. We represent a big number of international vessel owners that are not based in Egypt. We try to provide them with everything from A to Z, such as logistics, taxation, insurance and marketing details. We talk to them about what projects they should support. Wherever we can add value, we are here to provide support.

What is the most noteworthy project you have been engaged in?
The biggest project is our pipeline project in the Red Sea, which was awarded last September [2018]. It’s an interesting project because there are lots of challenges involved in terms of the area. There are two pipelines that will be laid along the Suez Canal, which is very busy, so that’s a challenge. But we are ready for it. We already finished the first phase and by April the main vessel will install the pipelines. We’ve also been supporting almost all of the offshore players in Egypt for years – BP, Eni, Dana Gas, Saipem, Subsea 7 and others.
We currently have 27 vessels operating in Egypt. The pipeline job itself requires an extra 11 vessels coming for three months, so we will then have around 38 vessels operating here. We are the biggest PSV charterer in the Mediterranean, and Egypt has the largest number of our PSVs vessels in the region – we have nine PSVs operating under our name. All of them are more than 800 square metres.

Do you have expansion plans apart from those in Egypt?
We are looking at the East Mediterranean region, as there are new gas finds and a lot of developments happening. This is the region we will be targeting for expansion. We already have a couple of companies with their own concessions in Cyprus, and are currently trying to target the Lebanese market. Lebanon is a challenging area. Drilling is always postponed, but we are positive Total will start drilling soon.

What are Pan Marine Group’s main aspirations for 2019?
We are expanding on a number of new projects, mainly in maritime. We are launching an integrated service package for oil and gas companies in Egypt. We will deliver supply-based management, including the drilling preparation and cargo inspections. The vessels are also under Pan Marine. This is the first integrated supply-based service to be offered to E&P companies in Egypt. We are doing this under a joint venture with Peterson, one of the biggest companies in the world, based in the Netherlands.

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