Mozambique’s potential, Saipem’s strengthJune 17, 2020
Bertrand Noyelle, managing director of Saipem Mozambique, talks to The Energy Year about Covid-19’s impact on Area 1 and Area 4 operations and how Saipem is advancing the country’s local content, training and energy transition. Saipem leads CCS JV, which is undertaking EPC works for the Mozambique LNG project.
How seriously would you say the crisis has hit the energy market?
The Covid crisis and unprecedented activity slowdown has created a sudden gap between offer and demand in oil and gas, leading to a very sharp decline in commodity prices.
The capex of global energy projects in 2020 is expected to be cut by USD 400 billion compared to 2019. This is a huge reduction, corresponding to roughly 20% of total yearly budgeted capex worldwide.
As far as Mozambique is concerned, the country is a relatively new player in the energy game with limited production, hence it has not been immediately impacted as much as the major energy-producing countries.
However, the impact from the investment side is there, in particular for the Area 4 project that is now expected to announce its FID in 2021 at the earliest.
Regarding the Coral project, our drilling activities with the Saipem 12000 drillship have been temporarily suspended and are expected to resume next year.
We are pleased that Total supported the Area 1 development, despite the major crisis that the sector is currently facing. In fact, the EPC of the LNG liquefaction plant of the two trains and associated facilities (capacity of 12.88 million tonnes per year) is the biggest Saipem project ever, with a value of USD 8 billion, of which 75% goes to Saipem and 25% to our joint venture partner, McDermott; the joint venture formed by both companies is called CCS JV. It is a huge project with major challenges regarding logistics, safety and resources, as well as technical and innovation.
Although we had to temporarily reduce the number of people at the Afungi site due to the Covid situation, with limitations on personnel movement and necessary quarantines, we have now restarted temporary marine works construction activities, with all required sanitary protocols.
What impact has the pandemic had on the Rovuma project?
In relation to our CCS JV project developing the onshore part of Area 1 in the Rovuma Basin, we are still in the initial steps of the project, working onsite in Afungi on the logistics and early construction activities, but the major parts are the engineering, procurement and project management, which are based at our Saipem head office in San Donato Milanese, Italy.
As the pandemic kicked off in Italy in early March, the whole project team started working remotely. All in all, in spite of this unexpected situation, we have seen a very good co-ordination within the team of the CCS joint venture.
The engineering and procurement activities have continued as planned. Some impact has been felt locally in Mozambique due to the state of emergency in the country (in force until June 30), related site restrictions, mandatory quarantines and relocations.
In general, the pandemic crisis has enhanced digitalisation and remote working, a new way of working that was already in progress in Saipem.
Will Saipem keep working to empower local content despite the crisis?
Saipem’s business model is to create value where we are present. Mozambique is a very strategic country for the Saipem Group and we are here for the long term. Our intention is to act locally and support local communities, education, partners, subcontractors and all our external stakeholders for the success of the projects.
We have recently signed an MoU with the Instituto de Formação Profissional e Estudos Laborais Alberto Cassimo (IFPELAC). Prior to the Covid crisis, we had already started training activities in Pemba, but due to the pandemic all schools and training facilities had to stop activity. Despite this crisis, we are starting to provide remote courses to the Mozambican trainers through new digital platforms. So, thanks to the new technologies, Saipem trainers can transfer their expertise and competencies to IFPELAC trainers in Maputo and in Cabo Delgado.
We are now providing courses on HSE thanks to our LiHS (Leadership in Health & Safety) programme and general knowledge on industrial projects.
This crisis has been an opportunity to experiment with new ways of transferring knowledge thanks to the new technologies, which are easily available, flexible and very cost effective.
Is Mozambique poised to embrace digitalisation?
I believe it is easier to start from zero and embrace the latest technologies than to get used to new ones after working with the old ones. The local industry still has very limited access to digital infrastructure, but new technologies are getting cheaper and easier to install. I think the less-developed African countries will embrace technology faster than others if they implement the right political decisions and get appropriate financial support.
How can Saipem support Mozambique’s energy transformation?
The energy transition worldwide is underway, and Saipem intends to play an important role in this future low-carbon environment. We are willing to support Mozambique in this transition by bringing expertise, innovation and technologies. As an example, we recently signed an MoU with UniLúrio University with the objective to train and support Mozambican professors and young engineers, providing the opportunity to participate in this exciting energy transition era.