Positioned to competeMay 19, 2021
Eyas Alhomouz, CEO of Petromal, talks to The Energy Year about the importance of going back to the drawing board as market conditions evolve and opportunities the company sees in subcontracting and leveraging its ESG commitment. Petromal is the energy investment arm of National Holding. In the UAE, the company focuses on providing EPC and oilfield services.
How did the market conditions change over the past year and how has your company coped?
The pandemic and the decrease in the number of projects has led to increased competition when it comes to pricing. I believe we were priced out of some projects we were bidding on. From that perspective, it was a very challenging year.
However, I think we’ve managed to manoeuvre around the challenges fairly well. We did not let anyone go, and we have not changed any of the packages for our employees. However, we suffered in terms of the expansion plans we had for 2020. Unfortunately, most of them did not materialise due, in part, to delays in projects that we have been working on or positioning ourselves for.
We had positioned ourselves to be ready to capture a certain market share in some services here in the UAE. 2020 has had a negative impact – not only in putting projects on hold but in terms of a paradigm shift in how both contractors and clients are dealing with the market and how to execute business.
Simply resuming activity or reactivating the projects put on hold is not the way forward. We now have to go back to the drawing board and see how we can cope with the ever-changing market we are in today. How can we stay relevant? As Petromal, we are learning some lessons. Our strategy is shifting.
What new markets or new scope of work are you planning to endeavour into?
We are at the drawing board, looking at different strategies that we can pursue within the market here. We’ve always eyed the renewable energy market in the UAE, but we were so busy with oil and gas that it was almost impossible to focus on green energy. It is the time now.
Moreover, being a local company, the way we review our capital expenditure and our operational expenditure is different from how a multinational would. They are looking at a reduction in their capex, while their opex is not really impacted. So perhaps Petromal can step in and play the role of capex investor. In short, if I cannot compete for the contract with ADNOC, then I will compete for the supply and the work with the major contractors by providing certain services, equipment or machinery that is no longer a priority for them in this market.
How has the market been affected by ADNOC’s new approach of awarding longer-term, integrated contracts?
I think ADNOC is looking to maximise efficiency by combining everything into one or two contracts. Companies like ours will not qualify for the umbrella contract. It is way too big, and requires services that we cannot provide. However, in the end, when it comes to the execution, I think none of the big OFS [oilfield services] contractors will be able to execute it in its entirety either, so they will be relying on the local partners and the smaller companies to help.
Has Petromal explored these opportunities in the big upcoming OFS/EPC packages?
Indeed, we have been exploring that market. We have been in active discussions with several of the key OFS and EPC players, and we are hopeful that once these contracts are awarded, we will have a certain share of that market.
As the UAE pursues gas self-sufficiency, how is Petromal poised to benefit from the opportunities coming from this sector?
As an international company, Petromal has relevant operations in Africa. There, we work with several international technical experts on developing the assets that we currently own. Some of these happen to be gas assets. So we are definitely trying to leverage the work that we are doing in Nigeria and in the Republic of Congo by bringing that expertise to the market here.
Also, ADNOC is looking to develop shale gas, and we have the required experience in this regard. So, we’re looking forward to this. Our goal is that once the time is right in Abu Dhabi and there is an opportunity for us to participate in such work, we will be positioned for it.
What are your international operations at the moment?
In Africa, we are operating in five different jurisdictions. We are in Congo, Nigeria, Gambia, Senegal and Guinea-Bissau. We do exploration in Senegal, Gambia and Guinea-Bissau. In Congo and Nigeria, we have producing assets.
As an independent IOC, what is the company’s approach to lowering greenhouse gas emissions?
We take ESG seriously. In our Nigeria asset, we are implementing a flare gas reduction programme. In the Republic of Congo, we are reinvesting part of our profits in social and educational programmes. We are also members in the Extractive Industries Transparency Initiative, the initiative that sets the global standard for the good governance of oil, gas and mineral resources.
Equity markets today are looking for companies that will have an environmental, social and governance impact. Before they write the cheque, they want to be sure of the impact you will have on the environment and on society. So this is an area that we are very much focused on. We believe in this.