Percentage of Satram's work concentrated in drilling activities50%
Monetary value of Satram's tug-boat investmentUSD 4 million
Satram weathers the slumpMay 20, 2016
Satram general manager Mohamed Ait Ben Ali talks to TOGY about the company’s activities following the dramatic 2014 fall in oil prices. Ben Ali discusses the continuing economic depression, the effect that the slowdown has had on E&P activities in Gabon and how Satram plans to move forward. Satram is an integrated logistics firm operating throughout Gabon’s hydrocarbons industry.
How has the fall in oil prices affected Satram?
Since 2014, it has been a case of managing the oil crisis. It is the first time that it has lasted for so long. We had been quite comfortable in the previous years up to 2014 with stable barrel prices of around USD 100.
To a certain extent, we weren’t really concerned about the price of crude oil and instead we’re concentrating our efforts on improving the quality of our services. The sudden and severe crash in oil prices has forced the sector to reorganise its activities.
For example, the decline in oil prices affected exploration projects here in Gabon. Today, almost all drilling activities in Port-Gentil have come to a halt, which is affecting Satram’s activities as 50% of our activities used to be concentrated on assisting operators logistically with drilling operations.
Satram signed long-term contracts with Total Gabon, Shell and Perenco in 2013, and we were in the process of bidding for several other projects. In order to manage our activities, we acquired new equipment that currently costs us more than the current market price.
Activity has slowed, and companies are cutting their costs. In the past two years, we have concentrated on managing this situation. We reduced our workforce by 1,000 employees since 2013, and we diversified our services.
Do you still have long-term contracts with petrol companies?
Yes, we still have the same contracts, but the activity is reduced. Big companies are more adapted to dealing with times of crisis. They have more resources to analyse the markets and foresee downturns. It is also easier for them to dispose of some materiel and equipment when they have to. Typical contracts are for three years with an option to extend them by an additional two years.
The crisis has affected exploration rather than Gabon’s production. Our work is divided 50-50 between production and exploration. We do a very high level of drilling work but, today, there is no longer any drilling. All drilling activities in Port-Gentil have stopped apart from some very small ones.
We are all hoping that the barrel price will recover soon. Then we could start developing drilling and exploration activities with oil and gas companies.
Which investments did Satram make in order to survive this oil price slump?
The crisis coincided with a reflection period, making us realise that we needed to diversify our services. For example, all the towboats currently available in Gabon are around five or six years old. We invested around USD 4 million in four towboats that were delivered at the end of 2015. Two of them are being used by Total Gabon on a permanent basis. Another vessel is occasionally being used by Total Gabon, and the fourth is on standby.
These towboats conform better to security requirements, are more adaptable, faster, more economical and more environmentally friendly than their predecessors.
We also invested a total amount of around EUR 30 million to 40 million in trucks back in 2014. In 2016, we are not planning any such investments but will only invest in upgrades or renewals that are absolutely necessary.
Do you think that the market is undergoing permanent changes?
Our aim is to maintain stability. We are working on a plan for 2021 to develop a clear vision to follow. The only thing that we do not know is how the oil and gas industry will develop. It could be the end of fossil fuels. There will be lots of changes through 2020. I do not think that it will be the end of oil and gas, but there will certainly be some changes.
Renewable energies will become more important. Big investors are asking questions about sustainable energy sources and environmental pollution and, of course, we are all dependent on them. If there is no investment, there is no business. For the moment, our main objective is to continue to develop and to open up in West Africa and allow Satram another 43 years of business.
What progress has been made on the logistics school that Satram is planning to open in partnership with the Gabonese Republic?
We have submitted our business plan and are waiting for the final and formal confirmation from the Gabonese government. The creation of this training centre is important for Port-Gentil’s future.
Two years ago, the Oil and Gas Institute was created in Port-Gentil in order to train professionals within the oil and gas industry. We want to create a similar institute for the logistics sector.
There are approximately 47 different jobs throughout the industry, so the aim is to train young Gabonese in these areas. Currently, companies train their own staff, and it is difficult to get someone who has been very well trained externally.
We are all better off having a school like this rather than each providing our own training, which is far too expensive. The school will result in better quality training and will also serve to share our experiences.
What added value in terms of logistics could you provide to companies willing to explore the Gabonese deep offshore?
Satram has specifically invested in the maritime sector in order to be able to provide services to offshore companies. We have a department called Satram Offshore, which provides various services such as assisting companies when transporting equipment from the port to offshore platforms. We closely follow the sector and evolve in line with any changes in order to be able to provide the best service.
In the more immediate future, can you discuss Satram’s plans for 2016?
We feel that we have reached our capacity here, so our priority is to start operating in West Africa. We are exploring other countries such as Guinea, looking at the infrastructure and the port for example. There was a company called JSL that specialises in this area. We could reinforce this and go into construction and installation work.
For more information on Gabon, click here.
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