The place to be

Angola

TOGY talks to Luciano Furini, the Southern African regional manager of Saipem Angola, about the potential of the Angolan market, the impact of delayed projects, improvements in education and the country’s offshore environment.

Saipem has a USD 3-billion contract with Total to do the for EPCI of two FPSOs for the Kaombo project on Block 32. The two vessels are expected to be operational by Q2 2017. The company also has a seven-year contract worth USD 1 billion for operation and maintenance of the two vessels in 2014. Saipem has two permanent fabrication yards – the Petromar Soyo Yard and the Petromar Ambriz Yard. Saipem also has a fabrication workshop in Malongo and has its headquarters located in Luanda.

• On the Angolan market: “Angolan oil and gas reserves still offer many opportunities for the industry to grow and the country will remain a major player in the African market for years to come. Angola is a ‘must-be’ place for international oil and gas companies and contractors.”

• On project delays: “The main consequences of this situation are the awarding of a limited number of projects and an increasingly rigid negotiating position adopted by clients who are reluctant to recognise change orders and claims which emerge during works execution.”

• On training: “Angola’s educational system has improved remarkably over the past few years. Students and recent engineering graduates have a good, solid basic level, but the partnership between the oil and gas industry and local universities should be constantly strengthened and oriented to the actual needs of the industry.”

• On offshore work: “Angola has a natural favourable factor with respect to other areas due to the statistically limited amount of downtime caused by bad weather offshore.”

What is the importance of Angola in terms of the global oil and gas industry?
Angola has recently achieved the status of the largest oil producer in Africa, surpassing by a few barrels per day the historical leading position of Nigeria. Angolan oil and gas reserves still offer many opportunities for the industry to grow and the country will remain a major player in the African market for years to come. Angola is a “must-be” place for international oil and gas companies and contractors.

Manufacturing costs in Angola have traditionally been very high. How much of a hindrance has this been to engineering companies and how can costs be brought down?
Despite the devaluation of the local currency, Angola is still one of the most expensive countries in the region. This is due to multiple historical factors, such as the high costs associated with local manpower, office rental, transport and accommodation. With the drastic decline of oil prices these expenses are no longer sustainable. Further measures to cut costs seem to be the best way to weather the downturn and mitigate their strong negative impact on the company’s balance sheet.

What is the best way to ensure that subsea work in Angola, usually in deepwater, is undertaken efficiently without delays or setbacks?
One can say that Angola has a natural favourable factor with respect to other areas due to the statistically limited amount of downtime caused by bad weather offshore. Subsea works in Angola, as in every other part of the world, are based on efficiency, planning, co-ordination and the technical reliability of the entire marine spread engaged in operations. The best way to improve efficiency is by enhancing current technical concepts and developing new technologies to reduce project costs through internal and external synergies, as well as by continuing to implement cost savings and performance improvements in all processes. Of course, an efficient operation is a safe operation, and Saipem has safety as a top priority on all projects

How have low oil prices impacted EPCI contractors?
Like other EPCI contractors and operators in the industry, Saipem has been affected by depressed oil prices. Recent years were marked by a significant change in the size of the oil and gas market, accompanied by a notable reduction in investments by oil companies. The current downturn has also hit the deepwater segment, where, despite the efficiency and optimisation of projects, several operators have decided to put off various initiatives still in pre-FID phase. The main consequences of this situation are the awarding of a limited number of projects and an increasingly rigid negotiating position adopted by clients who are reluctant to recognise change orders and claims which emerge during works execution. Having said that, we may consider as positive the fact that our current major contracts in Angola were acquired by Saipem before the beginning of the oil price decline, which means that we have been able to mitigate the effects of the downturn.

What type of education or training is lacking in Angola in order for local people to be of the standard demanded by international companies operating in the country?
Angola’s educational system has improved remarkably over the past few years. Students and recent engineering graduates have a good, solid basic level, but the partnership between the oil and gas industry and local universities should be constantly strengthened and oriented to the actual needs of the industry.

What are Saipem’s plans and strategies for the next 12 months?
We intend to consolidate the Saipem Group’s presence in Angola through the Angolanisation plan. We will also pursue new initiatives with the aim of ensuring a larger share in the local market for EPCI, fabrication and MMO projects, as well as deepwater offshore drilling. Finally, we would like to improve efficiency and cut costs in order to remain competitive in the current low oil price market conditions.

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