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Fugro: A Brief Look into Service Companies in Times of Reform in Egypt
Fugro: A Brief Look into Service Companies in Times of Reform in Egypt
An Interview with John Evans, Country Manager of Fugro:
As Egypt enters the era of economic reform, industry players have reported different views regarding the trajectory the market is taking, while most expect a positive outlook, the sector is yet to recover from the challenges it faced during the previous years.
With a focus on service companies, Egypt Oil & Gas sat down with John Evans, Country Manager of Fugro, to understand how international players see the market in Egypt, its current challenges, and its potential in comparison to other markets.
Fugro is a global player in energy and infrastructure markets, specialized in geo-intelligence and asset integrity solutions for large constructions, infrastructure and natural resources.
What are Fugro’s future plans of expansion in Egypt?
We have just introduced a new offshore survey vessel to the market, the Kobi Ruegg. It is purpose-built, equipped with the latest technology to carry out a wide range of survey activities, in water depths from ten metres to thousands of metres. The vessel will undertake its first survey project, for PICO International Petroleum, this November. The Kobi Ruegg will be based in Egypt to support the country’s oil and gas sector, and will additionally undertake projects abroad in the Mediterranean and Red Sea.
Another investment Fugro has made in 2017 is the establishment of an onshore geotechnical division to undertake site investigations for major civil construction and infrastructure projects. The division includes an accredited soils laboratory for testing of soil samples. We are investing in new premises in Zahraa Maadi to support our expansion. The new premises will allow us to move to a single site that includes modern offices and laboratories, workshops, warehouse and yard space.
How does the company’s technology and strengths affect its market share and presence in the industry?
I believe we have strong capabilities, based the skills and experience of our staff, the technology, and the resources that we maintain in Egypt, which we enhance through training and investment.
Furthermore, we are also able to bring in other specialist technologies from the Fugro Group, as –and when—required. This allows us to maintain a strong market presence through fulfilling the requirements of our clients.
How does Egypt compare to other countries Fugro operates in, in terms of growth potential, company market share, and general outlook?
The Egypt market is better than many other markets, especially those in Europe and Asia, where investment in the oil and gas sector has fallen a lot. However, it still lags behind markets in the Arabian Gulf, where there is a lot of investment both in onshore and offshore oil and gas projects.
Fugro operates globally in an array of services; why does the company only operate in the petroleum sector in Egypt? And are you considering entering other industries in Egypt, namely renewables?
Our marine division operates mainly in the oil and gas industry; yet, our new land division also provides services to renewables, such as wind farms, and civil projects, new ports, desalination plants, power stations and refineries.
What are the main challenges faced in the Egyptian market?
Receiving payment from our clients can be slow. While this situation did improve for a while, it has now deteriorated again. Some clients are very slow payers, taking more than a year to settle our invoices.
In your opinion, how has the floatation of the EGP, the current reform program, and new laws impact the industry in general, and Fugro in particular?
The flotation of the Egyptian Pound presented a very difficult time for the company as we faced a loss in currency value worth several million dollars.
However, it is important to note that the flotation was necessary for the long term benefit of the Egyptian economy and hopefully this will allow us to convert Egyptian Pounds into foreign currency in the future.
How can Fugro impact the industry in Egypt? And in your opinion how can the private sector affect the industry in Egypt?
Fugro can support any large energy or civil construction project, whether on shore or offshore, so can provide crucial services and expertise to support Egypt’s development.
The private sector is important to provide new ideas and investment in order to create new companies and jobs and grow the economy in general but needs the government to create the right environment and regulation for it to thrive.
Given the current focus to improve the investment climate in Egypt, in your opinion, what steps should the government take, and which roadblocks for the private sector should be addressed?
Generally speaking, I think the government in on the right track, by focusing on making it easier to do business in Egypt. With regards to our activities, these are sometimes affected by delays due to customs and permits as well as slow payment, which all slow down our projects and therefore affect our clients and the economy. In the future, full convertibility of the Egyptian Pound will also be important to encourage continued inward investment.
Venezuela: Foreign oil companies in Venezuela feel the strain
Venezuela: Foreign oil companies in Venezuela feel the strain
As Venezuela’s oil industry crumbled over the past decade, there was one sector that remained standing: the country’s joint ventures with foreign companies, particularly the ones extracting heavy oil from the reserves of the Orinoco Belt.
Those deposits of sludgy extra-heavy oil give Venezuela the world’s largest proved reserves, and foreign companies including Chevron, Total, Eni and Statoil have decided it is worth continuing to work there in spite of the country’s mounting problems.
As Venezuela’s financial crisis deepens, however, and with a new set of US sanctions adding to the pressure, even the foreign joint ventures are feeling the strain. As conditions deteriorate, European and US companies will face tough questions about the future of their operations.
Foreign oil companies’ continued presence in Venezuela is already the result of their willingness to compromise.
In 2006-07, President Hugo Chávez moved to take control of the industry, which had received large-scale investment from companies including ExxonMobil, Chevron, ConocoPhillips and BP.
The sector’s “crown jewels” were four projects in the Orinoco Belt for extracting extra-heavy oil, which has the consistency of peanut butter, and upgrading it into a lighter form of crude that can be more easily processed by refineries.
Mr Chávez issued a decree to give PDVSA, the national oil company, a 60 per cent stake in those projects, and then sent troops to enforce the order at the point of a gun if necessary.
Two US companies, Exxon and Conoco, chose to walk away, subsequently suing to recover the value of the assets they had lost. The others mostly remained, deciding that retaining minority stakes was a better bet than a long and uncertain legal battle.
For years, that seemed like the wiser decision. Extra heavy oil in Venezuela has been a long-running success story: production rose from 200,000 barrels a day in 2000 to 900,000 b/d in 2016, according to the International Energy Agency, and that success continued even after PDVSA was put in charge.
Chevron, for example, was able to hold its production in Venezuela steady over 2010-16, at about 56,000 b/d of oil.
BP, which also accepted Mr Chavez’s terms, was able to sell its minority stakes in its Venezuelan joint ventures, along with some assets in Vietnam, to its Russian affiliate TNK-BP for an attractive-looking price of $1.8bn in 2010.
When the oil price slumped in 2014, however, PDVSA was plunged into crisis. Desperate for cash to service its debt burden, it has been starving its operations of funds.
“It has become very difficult to invest in the facilities or even to maintain them properly,” said an industry executive familiar with Venezuela. “Which is why production keeps declining.”
Estimates of Venezuela’s production vary, but the figures the government provides to Opec show a decline from an average of 2.65m b/d in 2015 to 1.96m b/d in October. Francisco Monaldi, a Venezuelan energy economist at Rice University in Houston, argues that PDVSA faces a “death spiral” of falling output and deeper financial crisis.
The effect of the cash drain is compounded by mismanagement at PDVSA, foreign executives and analysts say. The state-owned company had already had an exodus of talent under Mr Chávez — there are skilled Venezuelan oil engineers scattered around the world — and a squeeze on spending and political infighting have degraded its capabilities still further.
“PDVSA has no control or management,” Mr Monaldi said. “It’s not a company, it’s a set of fiefdoms.”
Dozens of PDVSA executives have been detained on charges of sabotage and corruption, paralysing decision-making. Last week, President Nicolás Maduro, elected after Mr Chávez died of cancer in 2013, appointed Major General Manuel Quevedo, a career soldier with no apparent oil industry experience, as the new chairman of PDVSA and petroleum minister. Risa Grais-Targow, a Venezuela analyst at Eurasia Group, wrote that his lack of experience would “cloud an already bleak outlook for PDVSA”.
Another problem is that the deepening recession is making it harder to import essential supplies, including fuel and light oil to dilute Venezuela’s own heavy crude. The country’s imports dropped from $37bn in 2015 to $18bn last year, according to the government and central bank, and have fallen again this year.
This already difficult situation has been exacerbated by the latest round of US sanctions imposed by the Trump administration this year.
Protest to stop seismic surveying takes the streets
Protest to stop seismic surveying takes the streets
A large group gathered at Puke Ariki to protest the seismic surveying happening off the coast of New Zealand.
Every eight seconds whistles were blown and voices raised, turning heads on New Plymouth’s main street.
The human-made noises were said to illustrate the disturbance that is currently happening underwater off the Taranaki coast – it was a “walking seismic survey on the street”.
At midday on Saturday a group of passionate locals and campaigners joined the Stop the Seismic Survey protest that started at Puke Ariki and moved onto Devon Street.
The Climate Justice Taranaki protest was an attempt to raise awareness and stop the surveying that is being done off the coast of Taranaki by the oilfield services company Schlumberger New Zealand.
Climate Justice Taranaki said it was taking action against both the process of the survey – sending sound waves out underwater every 10 seconds – and its purpose – to explore for oil and gas.
INEOS: National Trust stands firm against INEOS
INEOS: National Trust stands firm against INEOS
The National Trust was today holding to its refusal to allow geological tests on historic parkland in the face of INEOS’s move to seek a court order.
The company announced it had submitted an application to the Oil and Gas Authority for access to carry out seismic surveys at the Trust’s Clumber Park in Nottinghamshire.
If the application were granted it would allow INEOS to seek a court order for access under the Mines (Working Facilities & Support) Act 1966.
But there was no change in the Trust’s position on refusing access to the park.
A spokesperson said:
“We have been contacted by INEOS Shale with regards to carrying out investigative surveys relating to gas and shale extraction on National Trust land at Clumber Park.
“The Trust is opposed to fracking on its land and will reject any fracking requests or inquiries.
“We can see no justification for agreeing to surveying at Clumber.”
If the OGA gave INEOS the go-ahead to seek a court order, the company must prove in court that the National Trust had behaved unreasonably and that the surveys were in the national interest.
INEOS has been carrying out seismic surveying across its East Midlands exploration licences since early June. Under planning legislation, the work must be completed in six months to avoid the need for planning permission.
Fugro: Wins Ørsted contracts for site investigations
Fugro: Wins Ørsted contracts for site investigations
Fugro has been awarded contracts by Ørsted to undertake geotechnical investigations at two large-scale offshore wind development sites.
Ørsted is pursuing the development of these two new projects – Bay State Wind, located 15 miles off the coast of Martha’s Vineyard, Massachusetts and Ocean Wind, 10 miles off the New Jersey coast – to bring wind energy to American consumers and businesses.
The marine site characterisation at both sites involves highly specialised sampling and in situ testing which Fugro will perform from its dedicated DP2 geotechnical drillship, Fugro Explorer. For laboratory testing and reporting services Fugro will draw on its expertise from Norfolk, VA and Houston, TX in the USA as well as Wallingford (UK) and Nootdorp (Netherlands), with the objective of providing fully integrated deliverables. Prior to the contract awards Fugro carried out geoconsulting desktop studies and geotechnical ground truthing for Ørsted.
Ed Saade, President of Fugro USA stated that the two contracts provide an opportunity to expand on the successful relationship Fugro has with Ørsted in Europe. “We strongly support the growing offshore wind development activity here in the USA. It fits directly with our overall strategy for coastal zone management activity and coordination between industry, government and academia,” he added.
Site investigations commenced at the end of November and are expected to continue for three months. The projects will be conducted under Fugro’s QHSSE management system, which is in accordance with industry leading QHSSE and operational standards.
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CGG: Commercial court of Paris approves the safeguard plan
CGG: Commercial court of Paris approves the safeguard plan
CGG announces that today the Commercial Court of Paris approved the safeguard plan of CGG, after finding the claims filed by certain holders of CGG’s convertible bonds against this draft plan inadmissible.
The next procedural step of CGG’s financial restructuring is the hearing scheduled on 21 December 2017 to consider the motion for the recognition of the ruling approving the safeguard plan by the competent US Bankruptcy Court within the context of the Chapter 15 proceedings.
Subject to in particular a favorable decision by the US Bankruptcy Court, the rights issue with preferential subscription rights and allocation of free warrants to shareholders are expected to be launched in mid-January, with the settlement and delivery of the various securities issuances provided for under the restructuring plan expected to occur by the end of February 2018. It is to be noted that the Convertible Bonds due 2019 and the Convertible Bonds due 2020 may now only give right to CGG shares according to the terms of the approved safeguard plan.
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The trading on Euronext Paris in CGG’s shares (FR0013181864), Convertible Bonds due 2019 (FR0011357664) and Convertible Bonds due 2020 (FR0012739548), which was halted from 2:00 pm on December 1, 2017 will resume as from December 4, 2017 at 9:00 am.
Ocean Floor Geophysics: Unlocking the power of AUVs and USVs to map the world’s oceans: Shell Ocean Discovery XPRIZE
Unlocking the power of AUVs and USVs to map the world’s oceans: Shell Ocean Discovery XPRIZE
The Ocean Floor Geophysics (OFG) AUV team is proud to be part of a world first with the GEBCO-NF Alumni Shell Ocean Discovery XPRIZE team: autonomous seafloor survey with our world class Hugin survey and pipeline inspection AUV “Chercheur“.
AUV Chercheur was launched from the Unmanned Surface Vessel (USV) Sea-Kit, performed a high resolution seafloor survey with USBL positioning and communications to the USV, and was recovered by the USV.
This accomplishment by the GEBCO-NF Alumni team represents a huge stride forward autonomous mapping of the ocean’s depths, supported by experts, resources, and equipment from the Nippon Foundation, GEBCO-NF Alumni, Ocean Floor Geophysics, Hushcraft, Kongsberg Maritime, and Teledyne Caris.
Magseis: Changes in executive management – appointment of interim CEO
Magseis: Changes in executive management – appointment of interim CEO
CEO Idar Horstad has today informed the Board in Magseis ASA that he will resign as CEO of Magseis for personal reasons.
The Board would like to thank Mr. Horstad for the work he has done for Magseis over the past year and wish him all the best in his future endeavours. Mr. Horstad will remain with the company for a period to be agreed to facilitate the transition.
The Board has constituted Per Christian Grytnes as CEO. Mr. Grytnes has an international executive background from oil & gas companies, service companies and start-ups. He started his career as a researcher at Rogaland Research and later joined Saga Petroleum. He developed ODS-Petrodata into a world leader in rigs, marine and field construction market intelligence. ODS-Petrodata was acquired by IHS Inc. He continued as an executive for IHS Energy content and data.
This information is subject of the disclosure requirements according to section 5-12 of the Norwegian Securities Trading Act.
Thalassa Holdings: Executes definitive agreement for the sale of the assets of WGP Group Ltd
Thalassa Holdings: Executes definitive agreement for the sale of the assets of WGP Group Ltd
Thalassa Holdings Ltd (AIM: THAL) (“Thalassa” or the “Company”) is delighted to announce that it has conditionally agreed to sell the business and assets of the WGP Group to Fairfield Industries Incorporated (“FFN”) for a maximum cash consideration of $30,000,000 (the “Sale”).
Gross initial proceeds from the sale of WGP will be $20,000,000 (approximately $19,750,000 net of transaction costs). A further $10,000,000 will become payable by FFN contingent on certain customer contracts being entered into within 5 years of completion.
The Company has agreed to leave up to $2,500,000 of cash in the business to meet its working capital requirements during the first five months of 2018. Any revenue received post completion in relation to certain sales made, services provided and work undertaken by WGP Group prior to completion will be repayable by FFN against this working capital amount.
The Sale is of sufficient size relative to that of the existing Company to constitute a disposal resulting in a fundamental change of business, pursuant to Rule 15 of the AIM Rules and completion is, therefore, conditional upon the approval of shareholders by way of an ordinary resolution. Based on Thalassa’s classification as a holding company and its continuing business, the Company has sought and received confirmation that upon completion the Company will not be regarded as an AIM Rule 15 cash shell.
The Company had previously announced on 15 August 2017 that FFN would invest $2,000,000 to acquire a 20% equity stake in ARL (the “Investment”), together with a 2year option to purchase the same number of shares at the same price. The detailed agreement relating to the Investment has yet to be finalised and is now expected to be exchanged by no later than 31 March 2018.
The Board of Thalassa (the “Board” or “Directors”) believes that the terms of the Sale and the Investment represent good value for shareholders, and further reasons for the sale are set out later in this announcement. As such, the Directors unanimously recommend that shareholders vote in favour of the Resolution to be proposed at the General Meeting as they intend to do in respect of their beneficial holdings amounting, in aggregate, to 3,622,441 Ordinary Shares, representing approximately 17.6 per cent. of the existing ordinary share capital of the Company.
A circular containing, amongst other things, further details of the Sale and the notice of the General Meeting to be held at Columbus MonteCarlo, 23 Avenue des Papalins, MC98000 Monaco is being posted to shareholders of Thalassa and is being placed on its website today.