Post-pandemic potential in QatarJuly 20, 2020
Mohammed Al Saee, general manager of Doha Petroleum Construction Company (DOPET), talks to The Energy Year about how the company’s operations have been impacted by Covid-19 and how it has leveraged the digital transformation to navigate the crisis. DOPET provides EPC, EPCI, maintenance, fabrication and project management for the energy industry.
How has the Covid-19 pandemic affected DOPET’s operations?
Our main office is located in the Salwa Industrial Area, where the majority of Qatar’s first Covid-19 cases were discovered. With that area being shut down from one day to another, we found ourselves in a difficult situation as we were unable to execute most of our projects. Operations at the office, where we had more than 250 people looking after different oil and gas projects, came to a complete halt. Luckily, our holding company had a building that was vacated at the same time and we were able to move in there on a temporary basis to support our projects. All this happened in less than five days.
The lockdown of the country’s airports caused major difficulties. In our business, we have daily communication with suppliers in Europe and the US for the procurement of materials. However, since all the manufacturers in Europe and the US were also coping with the lockdown in their respective areas, the delivery of our basic products and materials was delayed, which subsequently impacted our ability to execute projects.
Prior to the crisis, we’d had specialised engineers travel to Qatar to supervise the installation of the equipment we had purchased. Those engineers could no longer come to Qatar due to the pandemic. That also affected our work.
Have you managed to leverage the digital transformation to navigate the crisis?
Digitalisation has helped us a lot. In 2019, we started the implementation of the SAP ERP [enterprise resource planning] software in our organisation. We were lucky to be able to bring the software to life just when the lockdown hit the industrial area. We had less work on projects and we took advantage of that period to launch the system. We had just enough time to learn and develop the system and make it suitable to our needs.
We are now fully digitalised and are carefully following the global standards for digitalised companies and economies. We are able to work remotely without being in a particular location. Once the lockdown was lifted, we sent an operation team back to the industrial area, while the management, admin, finance and a few other departments stayed in Doha. Today, we are all connected on a daily basis and we have managed to maintain seamless communication between the company’s different departments.
QP has announced plans to slash its budget by 30% to achieve cost optimisation. How is this affecting the local services sector?
Reductions in rates are perfectly normal in times of crisis. QP has also signed important agreements to keep most of its projects afloat despite the pandemic. We have not yet seen the impact of price reductions; this will come in due course. The issue is that we work with local and international subcontractors, and many of the local players struggle to get the resources and basic products they need to continue their projects. The services sector has been severely impacted but not because QP has cut back on expenses. Despite the current challenges, QP’s projects are still moving forward.
For us, there are delays that are unfortunately completely out of our control, and we are having frequent discussions with our clients and peers with regards to these. Overall, projects are still moving forward, even though they are running behind the original schedule.
We are an EPC and EPCI contractor. Companies in our line of business, especially engineering firms, are facing difficulties finding available manpower and trained engineers. Every project starts with engineering; once that gets delayed, procurement and construction are heavily affected too. A project delay can represent a costly occurrence for our company and heavily impact our financials, as we normally expect 50% of any project that we are working on to be paid on a current-year basis. Instead, many of our expected payments have already been deferred to next year.
What expectations do you have with regard to volumes and productivity in the coming months?
We remain optimistic about the opportunities that may arise post-pandemic in 2021. It is obvious that whenever there is expansion of existing plants or refineries for additional productivity, there will be maintenance works. We are currently preparing ourselves to expand our capabilities to take on more shutdown projects. We are working with our in-house teams and are also open to entering into technological collaborations.
Our only worry is the price of oil. When the price per barrel is high, clients are more encouraged to launch new tenders for large-scale projects. However, with such projects being stopped now, EPC contractors are facing a tough climate and stiffer competition. Even if you win a project these days, you can easily end up making just enough to cover your costs. We hope the price will go up to a level that satisfies both the suppliers and consumers.
How did you manage to address the difficulties around migrant workers that were stranded in Qatar as a result of the pandemic-related restrictions?
We normally recruit project-specific manpower for a period of 30-45 days. However, because of the pandemic the workers we recruited back in February for two shutdown projects were not able to return to India and Pakistan upon completing their work with us at the end of March. We had to continue paying their salaries until the government announced that employers could terminate contracts with their idle workforce. At one point, we provided accommodation and food for more than 1,000 workers stranded in the country.
Most of the Pakistani nationals were able to return to their home country; however, the Indian government refused to repatriate citizens during the pandemic and we are still [as of June] accommodating at least 600 Indian nationals. This has cost a lot, not to mention that these workers have all been very disappointed about not being able to return to their hometowns and see their families. We never anticipated that the humanitarian and financial impact of Covid-19 could be so severe.
How optimistic are you about Qatar’s continued attractiveness as an investment destination?
In spite of the current difficulties, we have been approached by many international players who want to explore collaboration opportunities to support their operations in Qatar. I believe the country is doing well, even after a long period of embargo and in the midst of the coronavirus and oil price crises. The government took early actions to minimise risks and control the spread of the virus and most of the landmark projects in oil and gas are still moving forward.
We are continuing to prepare our economy for the 2022 World Cup and other ambitious developments are also moving ahead. Even if there is a delay in the expansion of the country’s LNG export capacity, the government is very serious about reinforcing Qatar’s position as an LNG superpower and this objective has also been reflected in QP’s recent order of 100 LNG vessels. For the next 10 years, I believe all companies in Qatar will have enough work to keep busy.