The outlook in QatarJune 17, 2020
Samir Chopra, managing director of Cape East, talks to The Energy Year about positive signs for continuing activity in Qatar’s energy industry and how the company expects to operate in the coming months. Cape East works in Qatar as a subsidiary of Altrad, a multinational group with a major focus on oil and gas services.
How well has Qatar handled the impact of the crisis?
As a result of the embargo, Qatar has become independent and self-sustaining. Growth opportunities have been coming up, with more work both in maintenance and in new projects. Bidding started on EPC for the North Field Expansion [NFE]. So things were looking very positive from last year onwards. The NFE contract was expected to be awarded in mid-2020, with construction starting in 2021 and lasting until 2025, and a second phase including two more trains lasting until 2027.
The outlook is still positive. QP and Qatargas confirmed they will go ahead with the NFE project. However, there are minor delays due to Covid-19. The EPC contract award will be pushed back to end-2020. The Covid-19 situation seems set to last only for the short term, but the low oil and gas prices are going to hurt. We have to see how long this will last. It could be between six months and one year.
In summertime, work in Qatar is reduced anyways due to the heat and people going on holiday. It will pick up in September. We hope that by September Covid-19 will go away, and oil and gas prices will recover along with that. We expect rates will also pick up and investment will resume coming into the industry.
Are you seeking any additional efficiencies during this period?
Our work is labour intensive, comprising onsite construction where a physical presence is required. We reduced our office staff and they now work from home. This includes positions in management, the support service team, procurement, finance, accounts, HR and estimations. On the construction sites the project management team, site supervision team and workforce all need a physical presence; there is no way for them to work remotely.
We have a small portion of time being lost as we need to do temperature checks, especially when people get on the bus, are onsite or return to the camps.
How have you managed the impact of the crisis on the supply chain?
It impacted us, but to a very minor extent. Clients have recognised that there are issues and if certain material is getting delayed, we can take on that work later. We have also proposed to clients other options from different suppliers and they have been open to that if it meets the requirements. On the other hand, we keep a stock of two to three months, as most of the insulation material is not available locally.
Regarding painting, there are local manufacturing plants belonging to Hempel, Jotun and other companies who keep large stocks, so there were no issues there.
Will local production get a boost after this crisis?
After the embargo, Qatar’s main focus was to be self-sustaining in food production. They have done a lot of work on that and now they are exporting these products. Following upon this, I think they might now focus on personal protective equipment, and they are already setting up a surgical mask and ventilator manufacturing plant.
What are your short-term objectives?
During the summer period, it will be about demobilisation, sending people on holidays as work reduces and the shutdown operations finish. We are trying to arrange flights for people who came for the shutdowns so they can return to their home countries. That will reduce our costs as keeping them here is expensive – paying for their expenses, accommodation, food, etc. We expect that from June 3, 2020, India will permit charter flights to land, so as soon as that happens, we will start sending our people home.