Zohr gasfield's estimates reserves: 906 bcm (32 tcf)
Transition yearNovember 2, 2016
TOGY talks to Mohamed Asmail, vice-chairman of Misr Gulf Shipping & Offshore Company, about the challenges associated with developing the Zohr gasfield and the opportunities available for Egypt's marine sector in both the Mediterranean and Red Seas. Misr Gulf Shipping & Offshore Company has been providing offshore chartering, freezone-related activities, Suez Canal transport, rig positioning, subsea oil and gas infrastructure installation, sea-bed survey and port services in Egypt for 40 years.
What changes are occurring in Egypt’s marine services market during this low oil price period?
With the low price of oil, many marine services providers are utilising older vessels more than newer ones. They can do the same job as the more modern vessels but at a cheaper operating price. This tends to be the case for short-term rather than long-term contracts, and more specifically for work in the Red Sea rather than in Mediterranean waters.
In the Mediterranean, a lot more attention is being paid to dynamic positioning vessels. This is not the case in the Red Sea, and a few more operations with new clients are there.
Despite this, it does not mean that DP vessels are not available in the Red Sea. There are some clients that do request DP vessels in the Red Sea. Some clients have also begun to request newer vessels because they are fully aware that there is a limited number of opportunities in the market, the newer vessels are being chartered at a very low cost; in some cases even rivaling the rates of the older vessels.
2015 was a year of transition for the marine services sector. There was not a boom of opportunities, given the local and international economic climate, but our sector did see some stability in terms of operations and contracts.
Why are dynamic positioning vessels not as popular in the Red Sea?
Dynamic positioning vessels are less useful in the Red Sea because of the lower water depth. Most of the operations in the Mediterranean Sea end up being in deepwater and having an older vessel without dynamic positioning working on these projects is a lot more difficult. There is a lot less risk with the newer vessels, specifically when they are on standby or close to rigs. Dynamic positioning vessels are more focused and prepared for potential dangers. They are fixed and have more control over their position than older vessels.
Do you see more prospects for the domestic marine services sector in the Mediterranean or the Red Sea?
The Red Sea and the Mediterranean Sea are quite difficult to compare because the vessel specifications required are different. The bigger vessels will tend to be more in demand in the Mediterranean Sea, and the more conventional or smaller vessels will be more in demand in the Red Sea.
New discoveries in the Mediterranean Sea will mean an increase in demand for marine services there, and anyone who has the right specifications will be able to enter the upcoming tenders. At the same time, it will be a lot more difficult to enter the Red Sea market because businesses are already operating there, and there are already vessels awaiting contracts. If you don’t want to get into the Mediterranean Sea because you expect to see high competition, the same will likely face you in the Red Sea.
What is the biggest challenge for marine services contracted to the Zohr discovery?
Marine service providers who win contracts for the Zohr project may face obstacles in supplying the right number of vessels with the requested specifications. However, this is not definite since the clients would have a better understanding of what is available in the market and what best suits the field.
Operators may well request something that is not available in the local market and end up having to bring in vessels from outside. The challenge then becomes one of mobilisation, and bigger international companies may enter the Egyptian market to fill the demand.