The long game in MozambiqueMay 26, 2020
Andrew Schnitzer da Silva, CEO of Ascending, talks to The Energy Year about why Africa is positioned to attract investment as the world exits the Covid-19 crisis and whether current conditions will advance the digitalisation of training. Ascending provides training and human resources to the hydrocarbons industry in Mozambique and Angola.
What qualities of Africa will continue to attract investment to the continent?
Africa will have a great part to play as we exit this crisis. Africa is the perfect ground for natural resources and alternative energy investments. After recent cuts, energy companies will start looking to the African continent for big opportunities of higher returns.
Regarding Angola and Mozambique specifically, I would say invest in Angola if you are more risk averse as they have a more established energy economy with international ties, and doing business is an everyday part of the Angolan lifestyle.
For those seeking a higher risk/return, Mozambique, with its LNG [potential], is a great place to be. There is a lot to be developed there, but American and European energy companies have investors that demand quick returns and we need to learn how to play the long game. This is why the Chinese are so successful in Africa. They are more patient than Westerners, but if investors learn the waiting game and if they are willing to take the risk, then Mozambique is a fantastic place to be in the next five to 10 years. The next few years will probably be about getting positioned and establishing partnerships.
How has Covid-19 affected your operations?
The pandemic, coupled with the increased terrorism in northern Mozambique, hasn’t succeeded in turning us upside down but has made us rethink our operations. No matter what, the LNG developments are going to happen in Mozambique. We have been hearing since 2012 that the LNG developments would start – the first start date was 2015. So, we have been constantly adapting to shifts in the negotiating positions between the operators and the government.
In fact, we already had to adapt to the aftermath of the global financial crisis and to all the different project waiting periods up to 2019. Reaching 2019, it finally seemed that something was going to happen, and we started preparing for the business to develop. And then the world changed. We have had to go back to that semi-dormant state of waiting for things to pick up again, finding a difficult balance between staying in the country and keeping an efficient cost structure.
Some companies that cannot do this will have to leave. Others that have very strong balance sheets can endure this pause until they start producing. And then there is us. We’ve invested so much – not just in time and money, but also in human resources and certifying our trainers internationally – that we cannot afford to leave.
We’ve invested a lot in building strong relationships and goodwill with our clients and believe it’s worth staying the course. We’ll maintain our presence and keep our teams upskilled and ready to advance when business picks up again.
On the other hand, in Angola the challenge is directly impacting oil rigs and exploration campaigns. Oilfield service companies are struggling with a sharp decrease in their numbers and that naturally affects us as well. We have had to reshape our business structure to adapt.
Now, we are ready to embrace whatever the new normal is and we will be better prepared.
Will the Covid-19 pandemic increase the development of the local workforce?
In Angola, it is clear this will be the case. The pandemic has created huge travel restrictions and companies have seen themselves forced to resort almost exclusively to national workforces. I believe the balance between both will change forever to Angola’s great advantage.
In Mozambique, one of the ways we found to get through these waiting periods in the past was to work with donor-funded programmes. During the last downturn, British, German and Norwegian funds came in and created training programmes for the workforce. We were a natural recipient, and we did quite a few of them. Is this a time to continue the upskilling of the local workforce and to rethink the balance between the local and expat workforces? I think so.
However, there has to be a political will to invest in training the national workforce. I don’t know how these donor-funded programmes are going to distribute their funds in a post-Covid-19 scenario or what their priorities will be. Will they prefer to look internally, into their countries’ needs? Will there be a Mozambique-targeted fund, and if so, will the government channel those funds into training programmes?
So, the question is: Do we keep engaging the local workforce, which is more expensive initially as it needs training, or do we go with the expat workforce, which is ready tomorrow? If there is a government investment geared towards making local employment feasible, then I think we should go with getting the local workforce ready. This way we will have a workforce that’s ready when business picks up. And not only that. The government gets a better return on its investment by relying less on expats.
How has the crisis affected your business with IOCs?
Everybody has been hit by recent measures and training, specifically, has been put on hold. Regarding Ascending, we have training contracts with the major oil and gas players. As you know, the majors have adopted different strategies that range from putting everything on hold to keep on going with the business and our relationship with them is in line with the aforementioned strategies they have adopted.
Obviously, and for the time being, our training operations have been suspended but we are constantly assessing the return to normality and the resuming of training activities. We must not forget that we have commitments with government statistics regarding local content figures that we must complete within the predefined timeframes. So, naturally there is pressure on us to manage the delays that are naturally coming due to the Covid-19 situation.
On a very positive note, what we see that is a constant for all operators is that none of them have abandoned us. There is concern that a local provider like us is able to keep on servicing the majors to the standards that they have predefined and therefore there is an active interest in finding grounds for collaboration through these difficult times. We are getting a lot of feedback, and consulting with them about other projects. It is very positive in this crisis to see how well we are regarded by our clients, and this is probably the most rewarding feedback we could have expected out of these difficult times.
Has the digitalisation of training seen advances during the pandemic?
Most of the African continent is behind in internet access and communication infrastructure, but on the other hand, it has a large distribution of cell phones. Right now, Ascending is partnering and supporting a government programme to do television-based training. Online training is a challenge because of the lack of internet access. My opinion, however, is that online training is not going to become the new reality. The crisis will of course speed up digitalisation, but people still have natural resistance or barriers to adopting it. You can’t beat hands-on experience for certain skillsets.
Of course, things won’t go back to the way they were before, but the pace of the change won’t be as radical as everybody thinks. I think there will be a lot of talk about new forms of training in the upcoming one or two years, and then a balance between practical hands on approach and technological progress will be found.