Percentage of annual revenue DNV GL allocates to R&D:5%
Average age of Egypt's mature assets:more than 40 years
Egypt’s evolving services needsApril 15, 2016
Hisham El Grawany, the area manager of North Africa at DNV GL, sat down with TOGY to discuss the company’s role in some of Egypt’s mega-projects as well as Egypt’s potential to become a regional energy centre. DNV GL is a provider of independent certification and inspection services in more than 100 countries around the world.
Which projects are shaping your plans in Egypt?
Since 2002, independent certification, verification and quality assurance services have been in demand for deepwater projects in the Mediterranean. As these services were an essential requirement for deepwater projects, we decided to focus on them.
Since 2014, we have succeeded in adding two deepwater projects to our portfolio, the Burullus Gas Company’s West Delta Deep Marine Development phases 8 and 9a.
When we talk about projects in Egypt, we are not only talking about deepwater projects, but also fixed offshore platforms. We are certifying two platforms for Abu Qir Petroleum Company, a joint venture between Egyptian General Petroleum Corporation (EGPC) and Edison. One platform is already finished, and construction on the second is ongoing.
We are always looking towards the market. In the past, for example, we were never involved in refineries. Now, we are involved in independent inspection for Egyptian Refining Company’s Mostorod refinery modernisation project. The project is financed by EGPC, Qatar Petroleum International, Qalaa Holdings and other investors from Egypt and the Gulf area.
We’ve built on our position as the sole provider of certification of deepwater projects in Egypt and have started turning to other services as the number of opportunities in the past few years was very limited.
What are the market factors behind the Egyptian Refinery Company’s (ERC) Mostorod Refinery Project?
The refinery business here in Egypt is an old one, but projects in this sector include a lot of new things regarding environmental impacts, the quality of products and project management technology. It looks like it’s all about having a new attitude about the big projects you manage.
We participated in the tender process for this project, and during the technical evaluation we proposed a big meeting. I was impressed with the deeply technical questions that we received, and we succeeded in responding correctly. The ERC technical team decided to hire DNV GL to cover the activities in Egypt and worldwide, especially in Korea.
We are engaged in South Korea through the ERC team to follow and review GS Engineering & Construction’s activities related to this project. Our team is now here in Egypt and working on site inspection. Being involved in such a big project and supporting ERC is an achievement for us. It gives us confidence that we aren’t just adding value in deepwater projects, but also in brownfield projects.
What is DNV GL’s role in Eni’s Zohr gas field discovery?
We are working on multiple projects with Eni worldwide, but they have their own joint venture in Egypt with Petrobel. DNV GL has also been in co-operation with Petrobel in Egypt. Before Eni and Petrobel start looking for any support, they must complete the internal technical governance process. DNV GL can add value and support the activities of such mega-projects through independent technical advisory within all project stages such as reviewing design, monitoring fabrications, monitoring installation and monitoring commissioning, in addition to providing marine warranty services.
How would you rate Egypt’s downstream mega-projects compared to what is happening in the region?
Egypt is still concentrating on greenfield projects because of the increasing demand for energy and the government’s ambitious development plan. Consequently, the government must increase income and secure the energy that is demanded.
We should not miss out on operating expenses. Egypt’s assets are ageing assets. Most of them are more than 40 years old. If you are looking at the old oil and gas system in Egypt, you cannot ignore these assets. If you have a new project, you will receive the output from such old assets.
I wouldn’t categorise Egypt as solely concentrating on upstream. The country is also concentrating on the downstream sector for new projects and operations expenses. It is obvious for us, because now we have a lot of orders for due diligence, asset integrity management and process safety in design services. We have a lot of in-service orders, and this is also one of the strong points of DNV GL.
We are supporting Rashpetco, Burullus Gas Company and Gulf of Suez Petroleum, also known as GUPCO. We are supporting GUPCO for structure integrity management by looking at their old platform and the structural integrity based on activity studies, as we did many times in the past few years. I think Egypt is looking at capital expenses upstream and also concentrating on operating and capital expenses downstream.
What is the greatest challenge in providing services for deepwater projects?
There are a lot of challenges associated with deepwater projects including water depths, the distance between the fields and the shore and how to construct a pipeline from the point of services to onshore facilities. All of these are new engineering parameters in Egypt, but this is why you have IOCs working with you. This is not new for IOCs, and they are probably facing more challenging projects than this.
This is the business methodology in Egypt. EGPC is always looking for partnerships with IOCs to share investments and experience. These challenges seem like a lot for Egypt, but for IOCs, which have faced tough situations before, we feel like we have an opportunity to support them.
We are already working as a partner for local operators as well as IOCs. We are working in the North Sea with Statoil, with BG/Shell, BP and Eni. So, we are used to facing such challenges together and supporting IOCs. I think we have an opportunity to look for a partnership in this success story.
Why do you think independent inspection and certifications are so important to deepwater offshore clients?
It’s not only because the projects are challenging, but also much more difficult when something goes wrong after you’ve installed equipment in deepwater. You have to make sure at every stage, starting from design, manufacturing, transportation, installation and commissioning, that all the equipment is designed, manufactured, transferred, installed and operating according to applicable codes and standards.
We are covering all of these stages in our independent certification work. If you are taking the responsibility to make sure everything is working properly from the design on paper to the commissioning, this gives you confidence that everything is independently reviewed.
A high-value-added company should be used to this and used to working with a designer to create a concept. Bear in mind that all of the used equipment must meet specifications. It’s great to be able to say that most of the highly reputed standards and specifications used in the oil and gas industry are DNV GL standards and specifications.
What role does DNV GL play in setting the standard and specifications for the oil and gas industry?
DNV GL has contributed more than 170 standards and recommended practices to the oil and gas industry. One example of this is our contribution to submarine pipelines. This year we celebrate the 40th anniversary of DNV-OS-F101.
This standard outlines acceptance criteria and design procedures for submarine pipeline systems. It has been used for many high profile pipeline projects ranging from South Stream in the Black Sea, Langeled and Polarled in the North Sea to Wheatstone and Ichthys in Australia and many Egyptian offshore projects. The standard was the first and remains one of the few limit-state design codes available for pipelines with the significant majority of all new projects globally designed and constructed using it.
DNV GL makes one of the largest investments in innovation in our sector. We invest 5% of our annual revenue towards R&D. We invest in joint industry projects, or JIPs which means we work and invest with major companies in the oil and gas industry to solve the industry’s technical challenges. This results in a lot of joint projects to solve problems for society and manufacturers. Despite the current economic challenges in the industry, we continue to invest in R&D and especially JIP projects because we feel that it is how we are not only maintaining our world-class expertise in DNV GL, but also helping to improve the whole industry.
How do you think the country can support more international investment to make Egypt a regional energy centre?
We have to think about two things: facilitating the environment to make investment happen and facilitating the rules in the right manner.
This is the direction of the president and government in Egypt. They are thinking about how to simplify the investment regulations and rules. The government keeps working to reach this objective and to clear out historical problems. You cannot make changes quickly; you have to build on them gradually. The vision and the support to go with this approach are there.
I think the government needs to accelerate the implementation of rules and regulations and facilitate the means for that. If you look at the new Suez Canal, for example, the investment area around the new Suez Canal and the kinds of industries that should be there, you can find the government has their own vision of ramping up the petrochemicals sector. The petrochemicals sector is a part of the oil and gas industry, and I think this is a reflection of the ambitious presidential and governmental vision for this sector.
What role will training play in development of the market?
DNV GL has its own academy for internal and external training. One of our goals is to share knowledge and bring the education process to the markets. Through this process we are learning from society and society learns from us how to deal with challenges. This kind of co-operation and interrelationship has allowed DNV GL to continue operating for more than 150 years.
What is DNV GL’s growth strategy?
We are looking at Egypt as a base for the African continent because engineering education here is quite good. In addition to that, we are willing to travel to Africa simply because we are Africans. Most Egyptian engineers can speak English and some can speak French, but unfortunately, few can speak Portuguese, which is a problem because we are always looking for Portuguese speakers.
We see potential in East Africa because it is an area currently developing, with new projects that need support. The DNV GL way of doing business is to start working with IOCs and the government. We are working with IOCs not only to support them in their projects around the world, but also to help improve the societies they are active in.
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