Efforts to surviveApril 26, 2016
William Barnes, country manager for Toss WA, speaks to TOGY about the associated services company's efforts to survive the downturn in oil and gas prices, the need to search for more efficiencies and the complications of working with Customs in the country. The company is a subsidiary of the Sumitomo Corporation of America, providing casing, tubing, pipe storage and maintenance to E&P companies in Equatorial Guinea.
What activities has Toss WA been involved with in Equatorial Guinea since 2015?
With the way the industry is currently running here, nobody is expanding or talking about new projects. However, that doesn’t mean that I am not talking with the folks at MEGI, Ophir, Hess and the other operators on a weekly basis. I ask them what their plans are and what they see next because we plan to be here when everyone comes back.
Right now we are in survival mode. We are reducing our costs and making sure that the people and expertise that we have here are maintained. That doesn’t mean we haven’t had to cut personnel costs, because we have, but we are trying to hold onto as much as we possibly can.
Ensuring we support our customers safely and provide optimum value is always our primary mission. We want to maintain the relationships with our vendors, the folks here at the K5 Oil Centre and the government.
In the next few years, we will start hearing more about projects and how fast they are going to come to fruition because usually the first thing that gets ordered is pipe. Pipes have the longest lead time.
What is your plan to achieve efficiencies during the oil and gas price slump?
In every business there are overhead processes and operational processes. What you can change in the actual operations is limited. There are so many things that you have to match with what the customer expects to see maintained and inspected for the value of their assets. Step one is to look at the basic operations and make sure that we are doing things safely and that there are people trained and ready for the next challenges.
From the overhead standpoint, we need to analyse things such as what we are paying for in maintaining the pipe, what we are buying from the local economy and what we need to get shipped in that doesn’t exist here. It is my job to make sure I make those processes as efficient, clean and auditable as possible. My target is to look into those things so that when we do start up, we are ready. Everyone in the office is prepared so we are efficient when things begin.
How do you think the drop in oil prices will impact companies’ efficiencies in the long-term?
When you are contracting, you find out how to improve efficiencies and where you are going to adjust your process. To adapt, you ask things like, “Why were we doing that, and do we still need to do it?”
Sometimes the answer may be yes, sometimes no. When you get a no, it’s golden because that’s where you can improve. You can look for ways of being smarter as well as finding better technology to apply going forward. Even simple things, such as using a smaller pipe or refitting with different tools, all need to be examined and could improve the industry in the long term.
Is Toss WA considering moving its operations to Luba Freeport?
We will look at that when it is time. Moving to Luba is a healthy investment, but not knowing what the future will look like makes it a tricky decision. We don’t know how in-depth the drilling programmes will be, and how consistent they are will affect each company.
Obviously it would cost us money to decommission this operation and re-commission it someplace else. My real concerns are whether or not my clients and my partners also plan to go, and the limited infrastructure and space available in Luba. Is Algoa going to go? Is Schlumberger going to go? What about Hess, MEGI, Atlas, GEPetrol and G3? How robust is the next set of operations out of Luba and will operational return on investment justify the move?
At this point, we don’t know what to tell you about that. With oil and gas prices being what they are, we haven’t really begun to discuss it, so I will continue to make the operation in K5 as efficient as I can.
What is your evaluation of Equatorial Guinea’s Customs system and how does that impact your business?
I’m sure the government is trying to run a very clean and efficient Customs process, though there are challenges associated with these things. Whether they are personnel or procedural issues, the government will address them to become more attractive to companies coming back and reinvesting as the price of oil goes up.
The non-computerised Customs system certainly causes productivity issues for us. However, the bottom line is that if your workforce is not familiar and comfortable with the technology, advancing it will actually be a detriment. You have to kind of grow up with technology, and people in Equatorial Guinea are just starting to do that. If you move things too fast, then it just gets worse.
How difficult is it for Toss WA to recruit qualified local employees, and is there a lot of training required?
I do not think I can answer this fairly, since everyone that is here now was here six years ago. I am here full time because the company is reducing the cost of expatriate dollars. We are trying to make sure we shrink our costs. We have already had to let people go, so right now it is a matter of trying to take care of as many people as we can. We have not hired anybody new.
How would you rate the competitive landscape here for the services you provide?
The biggest competition is Tenaris, but I believe they have backed out of their yard in Luba because of the oil and gas prices. They are our biggest competition in Africa, but I do not know their plans for coming back. Chinese companies are making a play in many places in Africa for their pipe, so we do have some competitors.
We offer supply chain door-to-door operations. Basically, we take the headache away from companies that don’t want to be in the pipe business. All of these big players have grand designs and plans, and they do not want to get bogged down in some of these things. This is where we provide a service managing their pipe, inspections, maintenance, fabrications and making sure those things are prepared and ready.
What is your vision for Equatorial Guinea in the next five years and how do you hope to grow the company and your market share?
My hope is that Equatorial Guinea will drive forward into the next wave of oil and gas prices. Every industry has its ups and downs, and I am hoping this downturn will create opportunities for even more companies to come in. People who do not have leases might be able to get one, and things will be productive again.
I am hoping that based on the relationships we have here already with MEGI, Hess and Ophir, that we not only maintain those relationships but build those with their projects. That also creates an opportunity for me to offer services to other companies as they come in.
My job is to have conversations with them and let them know we can help them in these areas. Hopefully, the price is right for them to give us serious consideration. It is mostly about building relationships, and I plan to do that while I am here.