Slow season for Luba FreeportMarch 26, 2018
Howard McDowall, director and general manager of Luba Freeport, talks to TOGY about drilling activity in Equatorial Guinea, port development and expectations for the coming years. Luba Freeport is awaiting ministerial approval for a port expansion project, which will include a 200-metre quay extension.
Luba Freeport was founded in 2000, with GEPetrol (37%) and Africa-focused Lonhro (63%) as the shareholders. The company is a port services and logistics centre and distribution facility for vessels in the West Africa region. The government has a vision for Luba Freeport to become a logistics centre for the oil and gas industry in the Gulf of Guinea region. As such, it has mandated that oil and gas services companies move their operations to Luba Freeport by 2018, and it has also created a duty-free regime on transit cargo.
•On a bright outlook: “In 2019, there will be much healthier drilling campaigns. Blocks have been awarded. It takes some time between being awarded and when you can physically drill.”
•On the impact of costs: “We have had several visits from companies that are already established in Malabo looking at the possibilities of moving here, but I think 2018 is going to be a difficult year. There is very little drilling activity while companies are moving down from Malabo to Luba. There are costs involved in this, but there is very little income. Everyone is dependent upon drilling activities. If there is no activity, then there is very little business.”
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What is the status of drilling activity in Equatorial Guinea?
In 2015, all the oil companies were drilling. We were at fairly maximum capacity as far as drilling was concerned. We had roughly 115 vessel calls per month. At the moment, activities are very low. There is currently no drilling going on.
In 2019, there will be much healthier drilling campaigns. Blocks have been awarded. It takes some time between being awarded and when you can physically drill.
ExxonMobil has a programme to start a drilling campaign later this year, by September or October. The company announced oil findings in Block EG-06 in December 2017. We see the prospects.
Kosmos anticipates drilling in 2019, both here and next door in São Tomé. The company will probably do it from here.
Ophir Energy has a major gas find in the Fortuna field. For first gas to be produced, the wells need to be developed.
When ExxonMobil was doing its last drilling campaign at the end of 2017, which it did for about three to four months, we had roughly 30 supply vessels per month just for that. If Exxon starts drilling again, then Kosmos and Ophir, we will be looking at 90-100 vessels per month again.
Are more companies establishing themselves at the Luba Freeport?
In 2018, the ministry wants all of the oilfield services companies to move from Malabo to Luba Freeport. We have had several visits from companies that are already established in Malabo looking at the possibilities of moving here. However, I think 2018 is going to be a difficult year.
There is very little drilling activity while companies are moving down from Malabo to Luba. There are costs involved in this, but there is very little income. Everyone is dependent upon drilling activities. If there is no activity, then there is very little business.
How are developments at the Luba Freeport progressing?
The shareholders are due to give a presentation to Minister of Mines and Hydrocarbons Gabriel Mbaga Obiang Lima on the developments, including the main elements, which are the 200-metre berth extensions, as well as several other projects that are being looked at. It will take roughly 14 months to carry out the development and will probably be completed by the end of 2019.
What makes the port an attractive base of operations for the region?
Customs duties are exempt within the port. If ExxonMobil decided instead of sending small vessels to Nigeria, to consolidate everything, send it to Luba, then ship it out when required on smaller vessels, it would be more cost-effective. There are also several coastal vessels that come here on a regular basis, which can ship all over the Gulf of Guinea.
It has always been an idea that regional hub activities would happen here. We have had them happen on a small scale. Hess used the port for operations in Ghana. Schlumberger and Baker Hughes have used it for Ghana, Abidjan in Côte d’Ivoire and Liberia. There has already been a background of regional activities.
How do you ensure that port staff is properly trained?
In 2000, we took on about 20 Equatoguinean nationals and brought in a variety of expertise from abroad to teach them. That technology transfer has been ongoing. We still have training, both in-country and abroad.
In 2003, we had 17 European expats, 52 Asian expats and 84 nationals. Currently, we have five European expats, 13 Asian expats and 87 nationals. We are compliant with local content requirements. We have three Equatoguinean nationals in director-level positions, four in managerial positions and eight in supervisory positions. We have done that by teaching them the job and how the project works, and by promoting from within.
What are Luba Freeport’s objectives through 2020?
We want to get business here. If the presentation to the minister goes as expected, I anticipate there will be a quay extension done before 2020. I think it will be quiet before then.
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