Trust in Angola’s local playersFebruary 22, 2021
João Filipe, chairman and CEO of Cabinda Shipping Services (Cabship), talks to The Energy Year about the revolutionary potential of digitalisation in the logistics sector and opportunities the company is eyeing in the near term. Cabship offers shipping services for liner and petroleum vessels as well as providing material management services, onshore and offshore, and oilfield supplies.
How do you reflect on the various challenges presented by Covid-19 in 2020?
The business has been hit pretty hard this past year due to the pandemic and low oil prices. Although oil production continued throughout the year, several offshore activities have been suspended as companies were establishing their standard operating procedures for dealing with the coronavirus.
All the new projects in the industry were cancelled and we had to reduce our workforce by 40%. About half of our remaining employees are still at home and 10% of them are responsible for responding to our clients and their specific requirements. Up until March 2020, we were offering 24-hour customer service to support the offshore and onshore activities of the industry. However, due to the pandemic limitations, we are now only operating 12 hours per day. We have some indication that things might return to normal in 2021 at some point.
The pandemic aside, in 2020 we signed a new contract with Chevron, which is a continuation of the existing services we had been offering. Initially, our contract with them ran from 2016 until 2020. Last year , Chevron issued a public bid for warehouse and material management services, as well as dock and crane operations services onshore and offshore. We participated and won those two bids and signed the contract for another three years in October 2020.
In addition to that, we also participated in a material management bid for BP. Discussions are still under way, and we seem to be prequalified. We are anxiously looking forward to the results of the bid and are confident about our warehouse material management solutions we can offer to companies like BP to optimise their warehousing space and help them save costs. That allows them to focus on their core business, which is E&P.
To what extent does digitalisation represent a potential revolution for the logistics sector?
Going digital is the future. It is key for organisations to embrace digitalisation. One of the challenges we face in Angola – which should be resolved by the Angola Cable project – is the poor quality of network bandwidth. We can have good ideas and intentions but we cannot fully derive the benefit of going digital with a poor internet connection.
Integrating new online warehouse management and order picking software systems into our activities is key for enhancing efficiency and productivity. We currently use an enterprise resource planning system that has been tailor made for our operations to keep track of our clients’ materials on our premises and offsite. In order to optimise our daily operations, our teams on the ground also use smartsheets and other Microsoft tools for supply chain management.
What steps have you taken to enhance the company’s digital infrastructure?
As we get into the marine segment, we are definitely going to acquire the necessary certifications and relevant accreditations, just as we have already done for our other services such as warehousing, freight forwarding and transportation. Once things normalise and people can travel more freely without fear of contracting the virus, then we can start deploying the workforce on the field.
We are also looking at undertaking a company-wide IT upgrade to embrace the most sophisticated and advanced technology solutions for our daily operations. We are working on extending our server’s reach and capabilities using cloud systems and improving its security.
What sort of opportunities is Cabship eyeing in the near term?
We are engaging with Gemcorp to see if there is an opportunity for Cabship to provide logistics solutions for the new Cabinda Refinery project.
Additionally, we are planning on entering the marine services market to offer supply boats, PSVs and offshore accommodation to some extent – even in FPSOs. We have been engaging with the likes of Total and Exxon, mainly because we have a new strategic partner out of Singapore to offer offshore marine support services.
As far as 2021 is concerned, I foresee a year of recovery, reflection and consolidation. In Angola, I do not expect major projects to come on stream before 2022. We have facilities in Luanda and Soyo and a bigger yard now in Cabinda to support our operations. We are able to service our clients in these places with the current infrastructure we have.
How do you assess the importance of the new deepwater port in Cabinda for Angola’s offshore oil and gas sector in the years to come?
The deepwater port project in Cabinda is long overdue. The region has been pumping oil since the 1950s, but it has never had a decent port. It is a shame, really. But as they say, better late than never. A lot of talks have been held about a deepwater port and we welcome this important investment.
Given the line of business we are involved in, we would be very interested in participating in this new project, perhaps via managing some of the services and assets there. On the other hand, if they wish to bring in new players, we could invest small-scale in warehouses, cranes, yards, lifters, etc. within those facilities.
What are your hopes for the impact of the new local content law on the domestic industry?
The new local content Decree 271/20 is a very important piece of legislation and I hope that it is not going to be on paper only. The government departments that are in charge and have oversight of the industry should definitely ensure that this law is implemented. In the past, we had a local content Dispatch 127/03 but its implementation was not effective. Without constant inspection to ensure that whatever is agreed upon or decreed by law is carried out, the situation on the ground will remain the same.
IOCs and the large, international service providers have no option but to work with local companies. Oftentimes, international companies would say that there is no local capacity, local people are not capable and the technology is not present. I do not agree.
As Cabship, we would like to have more and more types of equipment manufactured in the country. Nothing is stopping us from going to Aberdeen or Houston to buy equipment. However, we could instead build strategic relationships with the companies in these places and bring their know-how here. That way, at the end of the day, there is some Angolan value in the process and we can generate revenue for the country and jobs. I hope that this time we will succeed in the implementation. Equally important is the establishment of a local content fund to support the entrepreneurs’ initiatives and exclusivity or a preferential regime for the local companies.
What must local services companies do to gain a better chance at participating in complex developments?
I am told that in Nigeria 60% of the offshore marine support business is owned by Nigerians. The way the local content law can help us is simple. If I am able to provide what the contractor wants and I have the backing of an international company, then we have all we need to take on complex works. I could go out and buy a couple of boats and hire some engineers and I might not even need an international partner to do that. There has to be trust in the local companies. We have long been working with IOCs and there was not one day in the last five years that we have had a shutdown due to any inefficiency associated with our services.
That said, we are aware of the limitations some local companies have. We know that local companies are new in this market and giving them 100% of the work may not be the solution. However, we have to find a middle ground.
For instance, we could have a three-year plan where we delegate 40% of some oil industry work to the local companies, while 60% will go to international companies. After these three years, we go back to the drawing board and see how we performed. If the result is good, you can turn around the proportions so that 60% goes to the local companies. And you keep doing that until they are able to take complete ownership of these businesses. We don’t have anything against international companies but if locals can do the work, let them do it.
How important is financing for strengthening the country’s new local content legislation?
Having local content is nice, but we need to see the effect of such legislation in terms of job and wealth creation, and in terms of transfer of knowledge. I fully support local content legislation such as this, but it is imperative to have a fund or a bank behind the legislation. That bank or local content fund must issue clear instructions as to how the law will help generate wealth among the local services society.
Once I have an expression of interest from a potential client, I should get something tangible that I could take to this institution. I should be able to inform them about the nature of the deal and the financials involved, and in return I should be able to get the guarantees that I need to be able to seize the business opportunity. We don’t have such a bank or fund yet in Angola; we go to the normal commercial banks but they have no funding available.
Without a proper financial entity or bank focused on supporting local content development, local companies will never take on more complex work. We will just keep on cleaning floors, providing security and driving people around. There is no way for local companies to get involved in engineering or in building large structures with the current limitations.
What is needed to unlock Angola’s renewable energy potential?
Angola has a great opportunity to establish a diversified energy matrix.
Cabship has capabilities in this area. We were prequalified by IRENA after bidding for a hybrid project in Abu Dhabi that would use solar and diesel to supply power to the communities. Here in Angola, we have engaged with the relevant government departments to obtain the necessary support to carry out solar projects in the country. There are good ideas and great potential, especially in solar energy, but to date we have not been lucky enough to come across the right people that would help us put those ideas into practice. We’ve had issues with officials not taking the time to look at our findings. Bureaucracy is still a major issue.
In 2021, we will be looking at a few solar projects. Diversifying the power supply in Angola is key. We have sunshine throughout the year and Sonangol is already involved in renewables with Eni and Total.