Contribution of the oil and gas industry to CATEC’s revenue: 40%
Rise to the challengeDecember 9, 2016
TOGY talks to Shamel Elnomany, Vice President of CATEC, about the company’s boiler service in the Egyptian oil and gas industry, the other markets in which the company is active, the challenges the company faces as the sole non-European competitors in the Middle East for the type of service they provide and the steps the country needs to take in order to attract foreign investment.
What new contracts have you signed in the past year?
The past two years have not been so good compared to previous years due to the fallen price of oil. Our oil and gas business has decreased in the MENA region since the oil crisis started towards the end of 2014.
How much of your business comes from the oil and gas industry?
The oil and gas industry makes up about 40% of the whole company. We have a lot of business in Egypt, Libya, Algeria, Tunisia, Saudi Arabia and Oman. Since the Arab Spring, our operations in Libya have stopped due to the civil war. Our activities in Algeria and Tunisia have also decreased a lot.
What are your primary growth markets? Do the demand factors for growth come out of one project or are they part of a growth plan?
The UAE is one of them. We had not been operating there in the past, but in 2016 we started working there with Schlumberger and AlMansoori. All of [the activity in] our other markets decreased, but Saudi Arabia is starting to pick up again and we expect it to increase by the end of 2016.
We rent our mobile boiler systems, which are only needed during the well testing phase. Whenever companies have a job they call us to send our engineers and technicians to operate our boilers on the rigs.
What is the biggest challenge you face while doing business in Egypt?
Our biggest challenge is the time it takes to obtain visas for our personnel to travel. Since the oil business is very volatile and we never know when our customers will call and suddenly demand an operator urgently, we have to always make sure we have a minimum amount of operators on standby with valid visas.
For example, Schlumberger may get a call from Aramco in Saudi saying that they need a boiler operating tomorrow. Schlumberger then calls us and says they need one of our operators on a plane right now. That is why we need someone on standby with a visa in advance in order to be able to serve our customers in due time. Though this is costly, we have to do it to stay in business.
What new trends are you seeing in the oilfield services sector? Is technology raising efficiency?
That is true for most of the oil and gas industry, but in well testing this has not had that much of an effect. The customer does not really care about boiler efficiency. If you try to convince the customer that our boiler consumes less fuel than a competitor’s, he does not really care. However, that is actually how we sell to factories. With factories, the major component of savings is cutting down on fuel. The selling point of our boiler is that, although it is the most expensive in the world, the running costs are cheaper than our competitors’ boilers.
Do you see Egypt becoming more and more of a regional player in engineering services?
With its location on the Mediterranean and with access to the Red Sea and Suez Canal, Egypt is in the best location we could hope for considering we have business in North Africa, Europe and the Middle East. It is perfect.
If Egypt had the money the Gulf countries have, Egypt would have definitely been number one in the region. It has the expertise and the people; it has everything except for the money.
The country needs to become more secure and stable to attract more foreign investment. Egypt also needs a lot of help from the government in terms of financial stability. Moreover, the banks and the laws have to do more to assist motivating this investment.
Are there any markets outside the region that you consider growth markets?
In South Asia we are present mainly in India, Pakistan and Sri Lanka, but not for oil and gas. We are mainly present in the textile industry and are deeply involved in it. We are the exclusive provider of certain textile machinery for other companies, but for the oil and gas industry we only do boilers. We need to also expand our operations in African countries, especially Ethiopia who recently has a booming economy.
What is your vision for CATEC in the next year in Egypt taking into account all of this new growth happening upstream and downstream?
Our customers have asked us to expand into compressors and heat exchangers because they like to deal with only one contractor rather than many. This would be a way to increase our business and is something that we have been thinking about since 2015.
For more interviews, news and market insight on Egypt, please click here.