The engine of a new economy in AngolaJune 14, 2022
Paulo Santos, general manager of Ecoindustry, talks to The Energy Year about the company’s products and services for the oil and gas sector and the opportunities it sees in securing an international partnership. Ecoindustry produces chemicals and cementitious products for the oil, gas and construction sectors.
What products does Ecoindustry provide and what was your rationale for producing in-country?
Ecoindustry was founded in 2015 to produce chemicals for the oil and gas industry. It started its activities as a branch of the Ecofirma group, which works mainly in water treatment and special waterproofing systems and has its HQ in Portugal. Back then, Ecofirma had problems importing goods into Angola because euros and dollars weren’t available to pay for the imports. So, we decided to start producing here and we began with chemicals for water treatment.
Then, in 2020, following the privatisation programme launched by the government, we bought a factory in the ZEE [Luanda-Bengo Special Economic Zone], named Juntex, where we produce waterproofing, repair and plaster mortars, grouts, joint mortars, tile adhesives and technical quartz sands, and also provide injection products such as epoxy, polyurethane, cement and gel.
In September 2021, we launched our own construction products brand, Jaguar, which we started producing last year.
In which segments of the energy value chain is the company more specialised in terms of services delivered?
We are specialised in injection systems, used for soil stabilisation, concrete structural repair and water stoppage. These injections can be done with cements, epoxies, polyurethanes and gels. Our main projects are in dams, which require maintenance services.
For example, we are working with Odebrecht for the Cambambe dam. Most of the material needed for the maintenance is produced in Ecoindustry and we import some specific products such as gels, bollards and polyurethanes. In Angola, there are just two or three companies manufacturing cementitious products in-country, and we are the most specialised, especially due to our experience in other countries.
Which international brands do you represent?
We are the official representatives of several international brands, such as Drizoro, a Spanish company that manufactures chemical products for the construction industry focused on waterproofing and concrete repair that can be used in all types of constructions (buildings, dams, bridges, etc.). They needed a company to cover the African markets with their products, and of the more than the 300 products they have in their portfolio, we manufacture around 15 here, mostly cementitious. Drizoro’s products are known for their high quality and we produce them locally to be distributed in the African continent.
Then, we also represent Lovibond and KSB, which specialise in water management solutions and the supply of pumps and valves.
What are the company’s main assets?
We have five facilities for the production and storage of chemicals in Patriota in an area of 1 hectare [10,000 square metres], while our Juntex factory stands on a 3-hectare [30,000-square-metre] area. Combined, we have a warehousing area of around 30,000 square metres.
At Juntex, we produce only cement-based products. This is the biggest factory in Africa for cement products but [as of May 2022] we are working at only 5% of our capacity. At the moment, we are producing 300 tonnes per month of cement-based products but there are wide margins for improvement considering that the country’s demand coming from the oil and gas industry is consistent, giving us room to fill this gap. Moreover, we can self-power our factory, as we have a power station with a capacity of 2 MW.
What is your assessment of the group’s capacity to export to other African countries?
Ecofirma has a solid base in Africa, as we are established in Senegal and Ivory Coast, where we are importing our products from Angola because the costs are lower than importing from Europe. We have almost all the raw materials needed to manufacture locally, which makes us more competitive since we don’t have to charge for transportation costs, among others.
One problem that Angola and Africa have is the cost of transportation between African countries. For example, we pay more for shipping a container from Angola to Ivory Coast than to ship from Portugal to Ivory Coast.
Who are your main clients in the oil and gas sector and how do you plan to seize a larger market share?
Ecoindustry produces and directly provides chemicals such as sodium and caustic soda for oil and gas companies such as Sonaref, for whom we are one of the three main suppliers of these products. The contract with Sonaref has a length of three years and a value of almost USD 1 million, with a total supply of almost 500 tonnes.
Beyond this, Angola’s downstream sector is moving forward with the construction of new refineries, and we want to take advantage of this by providing chemicals to contractors that work for operators such as TotalEnergies. For example, we are suppliers of the engineering company Teixeira Duarte, which is in charge of maintenance for TotalEnergies’ buildings.
What are the key opportunities and challenges for Ecoindustry in manufacturing Class G oil well mortar?
Class G cement is a very specific product used in large volumes in the industry, particularly in the cementing of wells. It is required by oilfield services providers such as Halliburton and Schlumberger and we can produce locally, which would make us very competitive.
The Juntex factory was built in 2010 by <a href='https://theenergyyear.com/companies-institutions/sonangol/’>Sonangol specifically to produce Class G mortar for the oil and gas industry in Africa, but for the time being, we are working in R&D to make it happen. Fortunately, we managed to start manufacturing construction products right from the get-go.
We are ready to produce Class G mortar. We already have 99% of the raw material and know-how to manufacture it here; the big challenge is to get that remaining, secret 1% from the original manufacturing companies. That’s why we are looking to partner up with an established producer, to share knowledge and the know-how to develop the best Class G mortar. Yet without the commitment of players like Schlumberger or Halliburton, it’s very hard to take that final step.
What is the main challenge for local manufacturers in working with IOCs and international service providers?
Big oil and gas service providers are very difficult to penetrate. Those companies need the product, but instead of relying on local companies with the capacity to produce it in-country, they choose to import from abroad.
The problem is that the <a href='https://theenergyyear.com/companies-institutions/anpg/’>ANPG [National Oil, Gas and Biofuels Agency] asks IOCs and international service providers to work with Angolan companies, but they already have their local content back home and they still don’t trust the manufacturing capacity of Angolan companies. Thanks to international manufacturers’ experience and know-how, for example in producing Class G mortar, we could produce it here and this would be beneficial for both sides.
In 2021, we achieved the ISO 9001:2015 through SGS, which proves the commitment and high quality standards of our company.
What are the main benefits that finding partners could bring to your business activities?
We look at this opportunity as a win-win situation that would benefit not only EcoIndustry Juntex but also the partner from the oil and gas sector who comes on board. Production costs are lower in Angola, most of the raw materials are available locally, human resources are up to the challenge and our infrastructure was designed for large-scale production. We would benefit from quick growth, but would also create jobs, boost the local economy and suppliers, reduce the country’s imports and develop an export supply chain.
We believe EcoIndustry Juntex can be the engine of a new economy in Angola in line with the government’s desire for import substitutions. But we need a partner established in the sector that is willing to share knowledge about production and quality control standards, product composition and sales channels.
How important is it to get funding for your business initiatives?
It’s very important and that’s why in 2021 we joined a project under PRODESI [the Production Support, Export Diversification and Import Replacement Programme]. It is a significant incentive for the local businesses since it provides better interest rates than the traditional banking. It really helped us to start again after the pandemic and now we are sure we’re following the right path to become a top-class oil and gas product provider.