BE Oil and Gas

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Oil&Gas Technip asia pacific:

Expanding expertise

Total Namibia: Oiling Namibia’s mining boom

engen petroleum:

New frontiers

shell iraq: the south

Shell targets one million barrels per day at the Majnoon oil field in southern Iraq

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Martin Ashcroft Editor In Chief mashcroft@bus-ex.com Becky Done managing editor bdone@bus-ex.com

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From oil field to forecourt I

n this special issue dedicated to the oil and gas sector we follow the industry all the way from oil field to forecourt, from Greenland to Australia, stopping in Europe, the Middle East, Africa and Asia on the way.

Nunaoil is promoting oil and gas exploration in the Arctic waters off Greenland, while Bridge Energy has exploration and production projects in the North Sea. Shell Iraq has some unique challenges in a joint venture to increase production in the Majnoon oil field, while in Africa Tullow Oil turns its attention to Uganda after bringing the deepwater Jubilee field in Ghana on stream in just three years.

When it comes to support services, we bring you Technip’s operations in Norway and Asia-Pacific, Wood Group PSN in Australia, Jindal Drilling and Dolphin Offshore Enterprises in India, and pipeline construction company Al Khadda International in Kuwait.

To complete the journey all the way to the forecourt, we look at the expansion of Engen Petroleum’s extensive network of service stations across sub-Saharan Africa.

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M.Ashcroft Martin Ashcroft Editor-in-chief mashcroft@bus-ex.com

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oil & gas

8

8 Shell Iraq: Majnoon Jewel of the south

Increasing production at Iraq’s Majnoon oil field has involved skills development, de-mining and the preservation of precious marshland.

20

20 Technip Asia Pacific Expanding expertise

30

Gearing up for growth with a number of new subsea oil and gas mega-projects on the horizon in the region.

30 Nunaoil

Unlocking the frozen north

With potential for significant discovery in its waters, Greenland is unlikely to remain the sleeping giant of the oil and gas industry.

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contents

52

40 Wood Group PSN

From hook-up to decommissioning

The recent merger has created a leading international energy services company with the ability to deliver a full suite of brownfield services.

52 Afric Oil

In the pipeline

South Africa’s first BEE oil company is embarking on a strategy to achieve security of supply and growth in the marketplace.

60 Bridge Energy

Bridging the North Sea

68

A balanced portfolio of exploration and production oil and gas projects makes Bridge Energy an attractive investment.

68 Otto Energy

Hunting for elephants

Cash flow from existing operations, interests in both oil and gas, and a developing geographical spread.

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oil & gas

76 Al Khadda International Filling the pipeline

One of Kuwait’s oldest pipeline construction companies is counting on strategic partnerships and staff loyalty to achieve further growth.

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84 PanAfrican Energy Tanzania A bright future

Tanzania is making the most of its gas reserves to help meet the ever-increasing demand for energy.

94 South African Oil and Gas Alliance An upstream journey

108

Sub-Saharan Africa holds some of the world’s biggest hydrocarbon opportunities; and South Africa is the perfect base.

120

108 Total Namibia

Oiling Namibia’s mining boom

One of the world’s biggest oil companies is hoping to leverage its expertise to gain a foothold in Namibia’s booming mining sector.

120 Tullow Oil Uganda

Unprecedented achievements

Without a barrel of oil to its name 25 years ago, this FTSE 100 company now has billions; with its Ugandan operations making a valuable contribution.

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contents

132

132 Gulf Petrochem Plenty in the pipeline

The UAE offers plenty of opportunities for traders and producers of oil; but potential for growth also exists further afield.

142 Technip Norway Technical challenges

Subsea construction and engineering company working in some of the world’s most challenging environments.

150 Engen Petroleum New frontiers

This petroleum products marketing company is managing change and ensuring future growth by understanding its customers’ needs.

164 Jindal Drilling & Industries Limited Partner of choice

150

174

Teaming up with a preferred partner can be of great benefit to oil and gas companies hoping to create a footprint in India.

174 Dolphin Offshore Enterprises A global vision

India’s primary offshore oil and gas industry diving and engineering service company has a reputation for efficiency and innovation.

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Shell Iraq: Majnoon

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Erection of first pipe rack module

Shell Iraq: Majnoon

I

raq’s Majnoon oil field is one of the largest and construction management services to in the world, with estimated volumes of support the development of the new early 38 billion STOIIP (stock tank oil initially production system (EPS). The EPS comprises in place). But increasing daily output at two trains, each with a capacity of 50,000 this one-time battlefield from its current barrels of oil per day, along with an upgrade estimated 50,000 barrels to a projected of the existing facilities. “We awarded this plateau in excess of one million has so far contract following a tender process, of which proved to be no easy task.

Petrofac emerged the winner. From both As lead operator, Shell holds a 45 per a technical and commercial point of view, cent share in the project, with partner Petrofac was the most attractive choice for Petronas holding 30 per cent and Iraqi us,” confirms Shell’s project manager for state partner Missan (spun off from the Majnoon, Nasser Al-Bader.

South Oil Company in 2008) the 25 per In addition to upgrading existing facilities, cent remainder. A plan was agreed with Shell is also building new ones. “Part of Iraq’s Ministry of Oil to the reason this project is so develop the field in several challenging is because we are building new facilities; phases, and activity on and new facilities require the first phase—referred new equipment, materials to as first commercial production—is already and logistics arrangements,” Approximate number well underway, says Shell’s explains Al-Bader. “On a of personnel working Majnoon general manager, plant already in production in the Majnoon field Ole Myklestad. “This first with sufficient overcapacity, phase deals with reaching you might only need to make a specific production threshold of 175,000 minor modifications to existing facilities barrels per day.” and drill more wells—but it’s nothing like To achieve this, several activities are developing a greenfield site, which is what currently ongoing. The drilling campaign Majnoon is all about.” has already commenced, with two drilling With such high levels of construction rigs in place and a third set to move in activity in the field, one of the biggest shortly. Between them, the three rigs hurdles for Shell has been tackling the will drill between 15 and 20 new wells complex logistics challenge of bringing by the end of this year, giving Majnoon materials and equipment—in some instances the boost it needs to hit daily production weighing up to 100 tonnes apiece—onto of 175,000 barrels. the site. “So in February we concluded the Leading oil and gas services provider construction of a small jetty right in front Petrofac has been brought in to provide of our existing production station at Shatt engineering, procurement, fabrication al Arab,” says Myklestad. “And that allows

1,600

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International delivery, local capability Petrofac is a leading provider of oilfield services to the international oil and gas industry. Our focus is on supporting our customers, the oil and gas resource holders, to unlock the potential of their assets, whether on or offshore, covering both greenfield and existing brownfield developments. Our track record spans more than 30 years; we have 28 offices and some 15,000 staff worldwide; and we are a constituent of the FTSE 100 Index.

Today, we are working on three projects with around 150 employees in-country and around 1,000 more with our construction contractors. However, our inaugural and significant step into the country was with Shell Iraq Petroleum BV when we were awarded a contract in excess of US$240 million for developments in the Majnoon Field, southern Iraq.

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Work on the project began in mid-2010 and is expected to complete during the fourth quarter of 2012.

The project Petrofac’s scope of work includes the provision of engineering, procurement, fabrication and construction management services for the development of a new early production system comprising two trains each with capacity for 50,000 barrels of oil per day, along with the upgrading of existing brownfield facilities. Crude export from the processing facilities will be via a new pipeline which will be tied into the existing network.

Local capability, strategic importance The Majnoon project represents Petrofac’s first significant project in Iraq, a market

Shell Iraq: Majnoon

where we are very keen to offer our extensive capability. Having had our major operational centre in the Middle East for the past 21 years, we have a deep understanding of the dynamics of the wider landscape as well as a portfolio of ongoing projects in the region.

Wherever we work, our focus is always to optimise the use of local resources either through recruitment or the use of local businesses in the supply chain.

From a recruitment perspective, a good understanding of local needs is critical to ensuring that we can work collaboratively within local communities. On the Majnoon project the proportion of local manpower is very encouraging and an area we see growing significantly as more projects are developed and the economy grows.

In boosting local manpower, our training capability is also a great enabler. Training in

excess of 50,000 delegates annually through our regional and international centres, as well as in the field, we are able to offer a differentiated service that augments local technical skills. Today, we are supporting several IOCs in this context in Iraq.

Participation in the Majnoon development and final delivery of the project for both Shell and Petrofac is of strategic importance to our businesses and indeed the Iraqi authorities.

Both companies are working collaboratively, with many stakeholders in and out of Iraq, to ensure that we maximize shared knowledge and mitigate and manage any ensuing challenges as Iraq’s emerging economy develops.

Projects such as Majnoon will pave the way forward for future opportunities and developments in the country. www.petrofac.com

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us to bring in heavy loads.” Shell uses the main Iraqi port of Maaqal at Basra to bring what it needs into the country, and barges then proceed to the jetty. “This means that equipment and other materials that are not found in Iraq can be brought directly into the field, which avoids sending heavy traffic through populated areas—thus significantly reducing accidents and helping to preserve local road infrastructure.”

Al-Bader explains that the jetty is already benefiting the surrounding area.

“When we talk to contractors and people in Basra, they are very appreciative of the new jetty, as commercial navigation through Shatt al Arab had not been witnessed for 30 years. It has widened horizons here, giving other companies the opportunity to be part of this overall process—in fact, they are now approaching us with the services they can provide.”

But perhaps one of the greatest challenges Majnoon has presented to date has been the immense task of de-mining the field. “In order to build new facilities or to expand existing ones, you must clean up the area and ensure that it is safe,” says Myklestad.

“So de-mining is, and will continue to be, one of the critical activities which has so far taken priority. Majnoon was highly

contaminated with mines during the IranIraq war back in the 1980s, and de-mining has taken longer than we initially expected.”

“Mine clearance has been a major, major challenge,” agrees Al-Bader. “Obviously we had a duty to ensure that we completed the work with zero incidents. There were a number of mines that we discovered and removed safely; and we are very proud that we achieved this with no incidents. We spent

“Commercial navigation through Shatt al Arab had not been witnessed for 30 years” 14 | BE Oil & gas

Shell Iraq: Majnoon

Skid module

a lot of money on armoured vehicles and armoured bulldozers, so that even if there is a mine left behind that we encounter while clearing up, it will bring no harm to the operators of those vehicles.”

Security is also a major consideration, but Myklestad feels that this aspect of operations has run smoothly to date. “The safety and security of local communities and Shell employees—and by that I mean direct employees of Shell as well as the contractors and sub-contractors— is critical for us. We undertake regular security assessments with local authorities and that gives us a good understanding of the current situation. To date we have not seen an increase of incidents beyond the ordinary. Our procedures

regarding security in the field have been implemented and are so far working well— these relate to issues such as facilities and assets, or the mobility of getting people in and out of the field.”

All personnel at Majnoon are expected to conform to stringent health and safety standards; but given Shell’s commitment from the outset to employ as many local people as possible on the project, it was inevitable that a certain amount of training would be required to make this happen. “We try and employ as many local contractors as we possibly can,” explains Al-Bader, “and many of them are not specifically accustomed to working to Shell’s high standards. So we have had to raise the level of consciousness in

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Erection of second pipe rack module

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terms of HSE, planning, work procedures and so on, and that has also been a major challenge.”

“But we are gaining ground in terms of safety behaviours,” says Myklestad, “for example, in ensuring that people follow critical safety processes. On this front we are improving and our statistics clearly show that things are starting to get better, but changing mindsets is an ongoing daily journey. For local contractors and suppliers not yet up to industry standards, we do ensure that they are given the proper training, so they are still able to work for us.”

The company has certainly made major strides in fulfilling its commitment to employ local people. “We have a very high level of Iraqi nationals working in Majnoon: today there are between 1,500 and 1,600 people in the field and at least 1,300 of those people come from the local communities or the Basra area,” reveals Myklestad. “We’re very happy to provide employment, albeit on a temporary basis; but we’re hoping to implement development programmes and ensure people are able to secure further jobs in Majnoon once we go into Phase II development—or join other oil and gas industry projects or indeed, other industries.”

Training initiatives include on-the-job learning covering subjects from English language to technical skills, as well study programmes in the community at vocational training centres. Shell is also looking to develop a large oil and gas training facility in Basra itself.

Unemployment is a major problem in

Shell Iraq: Majnoon

Jetty completed

Basra, and Shell is doing all it can to improve the situation, says Myklestad. “Clearly, in the bigger scheme of things, we cannot solve all the unemployment in the community. But we are willing to continue working with the local authorities, the director generals, the Basra Provincial Council and Basra’s governor to help in any way we can.”

Meanwhile, social investment has extended beyond training and education into other areas of community wellbeing. Shell has provided equipment and training to doctors

in a number of clinics, and refurbished a park so that local people, especially children, have outside space to enjoy.

But there is also outside space to consider on a much larger scale. The northern part of Majnoon used to be marshland; in fact, there are still some small areas of the oil field which are considered to be part of the Haur al Hawizeh marshes. “In accordance with Shell’s environmental standards, we decided to avoid entering the northern part of the field, therefore helping to protect the Ramsar

“We undertake regular security assessments with local authorities and that gives us a good understanding of the current situation” BE Oil & gas | 17

site [Wetlands of International Importance under the Ramsar Convention]. Such sites are part of a very unique ecosystem in the Middle East,” explains Myklestad.

“We are now about to begin a biodiversity action plan, which will study the state of the ecosystem and the biodiversity—and indeed what it could look like if flora and existing fauna, as well as historical fauna, were to be restored,” he continues. “And

once we understand that, and the impact of potential re-flooding, then we can decide together with local authorities, local and international experts in the field and the national environmental entities, the best way to develop that northern part of the field. So we’re doing our best to develop Majnoon in the most environmentally responsible way.”

The Iraqi people are now pulling together

“Majnoon could become the jewel in the crown of Iraqi oil and gas production over time”

Series of skid modules

18 | BE Oil & gas

Shell Iraq: Majnoon

Perfect fit of two pipe rack modules at site

to make economic rejuvenation a reality, says Myklestad. “There is certainly willingness in country, in central government and locally in Basra to help improve existing infrastructure, and increase production and growth,” he affirms. “There’s still a way to go in some areas—for example customs approvals, visas and the entry and exit of expatriate staff—and we are working on those issues currently. But everyone has goodwill and wants to make things better— and we trust that within a year to 18 months, we will have worked through all these issues and production will have increased.”

Looking forward, the benefits of Majnoon to Iraq as a whole are clear. “We believe that because of its location and technical specifications, Majnoon can help

Iraq to increase and control production in the long term,” says Myklestad. “Shell, its partners and the South Oil Company are working to make Majnoon a world-class operation. In doing that, and through meeting our environmental and social responsibilities in Iraq, Majnoon could become the jewel in the crown of Iraqi oil and gas production over time.

“We hope that Majnoon can contribute to the economic development of Basra and Iraq, and help to provide social stability,” he concludes.

For more information about Shell Iraq visit: www.shell.com

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Expanding expertise With a number of new subsea oil and gas mega-projects on the horizon in the Asia Pacific region, Technip is gearing up for growth. Hallvard Hasselknippe, COO of Technip’s Asia Pacific Subsea Division, talks to Gay Sutton about building people, assets and technology

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Technip Asia Pacific

Technip, in a consortium with Samsung Heavy Industries, will provide engineering, procurement, construction and installation for Shell’s first FLNG facility

Technip Asia Pacific

Š shell

T

he Asia Pacific region is changing fast. Not only is the rapid pace of industrialisation buoyed up by economies that appear reassuringly resilient to the current spate of global economic convulsions, but there are promising new resources of one of the world’s most precious and sought after commodities: energy in the form of oil and gas.

As a world leader in the field of engineering, technology and project management for the oil and gas sector, Technip has a unique global footprint and a strong presence across the Asia Pacific region that dates back some 30 years. The company has regional offices in Perth, New Plymouth, Shanghai, Jakarta, Singapore, Bangkok and Ho Chi Minh City, and its operations are separated into three business segments.

The onshore segment provides engineering, technology, construction and project management for gas treatment and liquefaction (LNG), gas-to-liquid (GTL) and oil refining facilities, onshore pipelines and the petrochemical industry, and has recently diversified into biofuels, renewable energy and non-oil activities such as metals and mining.

The offshore segment specialises in engineering and fabrication of fixed shallow water platforms and floating deep water platforms including spar, semi-submersible, TLP, FPSO and floating liquefied natural gas (FLNG) units.

And finally the subsea business segment designs, manufactures and installs all the pipework and fixtures between the underwater well and the topside, from the

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Swee Bee Co Pte Ltd was established in 1972 and is today recognised as a premium fabricator for the Oil & Gas industry.

Over the past 40 years we have through our high level of performance and “ON TIME, EVERY TIME” completion, gained many worldwide customers who repeatedly award contracts to us. Technip has been one of our most valued customers for the past 10 years.

Our field of capability and expertise are briefly as follows: • PLETs and PLEMs • Pipe and Tie-In Spools • Overboarding Arch • Suction Piles • Flowline Riser Clamps and Pulling Heads • Mid Water Arch and Gravity Base • Reel Cradles • Installation Aids We are an ISO 9001:2008 company and this is our commitment to quality and excellence.

For enquiries please contact: Yeo Chew-Hock, Managing Director Email: hock@sweebee.com.sg | www.sweebee.com.sg

inspired Your weekly digest of business news and views www.bus-ex.com

Technip Asia Pacific

Asiaflex Products, Technip’s flexible pipe manufacturing plant in Tanjung Langsat, Johor, Malaysia made its first delivery on 29 September 2011, in a handover ceremony to Petrofac E&C Sdn Bhd

initial design stage through manufacture “It is less mature here in the Asia Pacific. and construction to commissioning. It However, there is a huge market opening, is the continuous development of this particularly with the emerging deepwater underwater technology that is making oil fields in Indonesia and Malaysia. There are and gas development possible in deepsea big fields in the tendering and construction locations, particularly in areas that would phases in Australia such as the Ichthys previously not have been considered and Gorgon gas fields off the north-west feasible. And this is an area of the business coast; and we are expecting deepwater that is growing rapidly. projects off the coast of Brunei in the future. We “The Subsea Division believe the region could cu r rent ly represent s potentially become the between 40 per cent and biggest subsea market 45 per cent of the group business globally,” explains globally. Therefore we are Employees gained Hallvard Hasselknippe, strategically building our following Global COO of Technip’s Asia resources, developing our Industries merger Pacific Subsea Division. people both in numbers

2,300

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Hallvard Hasselknippe, COO Subsea Division, Technip Asia Pacific

26 | BE Oil & gas

and competencies, and building our assets and technology.”

Technip Asia Pacific’s Subsea Division already has the capacity to manage complete mega-projects in addition to many smaller ones, and is able to leverage on the expertise, assets and financial strength of the group globally.

In terms of large-scale preparations for growth, the company has made one of the biggest investments in recent years into the Asia Pacific region with the construction of the Asiaflex Products manufacturing plant at Tanjung Langsat, Malaysia. Production at the new facility is project oriented: flexible pipe and umbilicals can be designed and engineered for specific projects and manufactured to a high specification using processes that have been developed by Technip globally over the last 35 years.

“We have been ramping up the plant over the past year, and we’re now very close to where we want to be with efficiency and productivity,” states Hasselknippe.

Prior to this, the Asia Pacific region relied on products imported from the company’s other manufacturing sites around the globe. Today, the plant not only produces products for the local region, but exports them to Technip operations in Brazil, India and West Africa and is beginning to market flexible pipes as a cost effective alternative to rigid pipes.

Officially opened in November 2010, the plant sits alongside a new offshore logistics base that will become the hub of the region’s subsea operations. Located on 20 hectares of waterfront with direct

Technip Asia Pacific

The production of flexible pipes at Technip’s plant

access to all the major shipping routes to Asia and the rest of the world, the site also houses a fabrication yard producing subsea structures, and a dedicated quay equipped to accommodate and load most subsea construction vessels and barges.

A more recent addition to the company’s assets and knowledge base came with the acquisition of Global Industries, the Houston-based subsea pipe laying company, in December last year. The merger increased Technip’s fleet of vessels from 20 to 33 (with two under construction) globally, and expanded the workforce by

some 2,300 people. “We’re very excited about the merger,” Hasselknippe says.

“Global Industries has strong resources and expertise in Singapore and Batam, and one of the primary assets we will benefit from with the merger in this region is Global 1201, a newly built vessel with S-lay and heavy lift capabilities.”

One of the challenges that lies ahead for the Asia Pacific Subsea Division, particularly as the deepwater mega-projects come on-stream, is to increase its workforce ahead of the increase in demand, and to ensure it has the full array of skills and experience to

“We have been ramping up the plant over the past year, and we’re now very close to where we want to be with efficiency and productivity” BE Oil & gas | 27

The Global 1201, a subsea rigid S-lay and heavy lift vessel, is one of the primary assets in Asia Pacific acquired through the Global Industries acquisition

Technip Asia Pacific operate to the highest standards.

“For me, it’s important that we are able to forecast our needs so that we can stay ahead. It’s too late to begin recruiting when you have a job to start, so we have been working on this for a while now,” says Hasselknippe. The recruitment, training and staff retention initiative is wide ranging, and includes taking on graduates, identifying suitably skilled and experienced expats, bringing in people from other parts of the organisation and working on training and team building.

One of the major areas of recruitment and training over the past 18 months took place as the Asiaflex Products plant was prepared for production. “Today, we employ more than 350 people at the plant, after starting from scratch 18 months ago. That involved a great deal of internal training— sending people to other plants in the group and bringing trainers to Malaysia from other areas of the group.”

This expansion of the assets and expertise within the Asia Pacific Subsea Division has been progressing at a steady pace for a number of years, strategically driven in preparation for an expected rapid growth in demand in the future. If the region does indeed become the biggest subsea market globally, Technip will be well prepared to supply the products and services required.

For more information about Technip Asia Pacific visit: www.technip.com

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Unlocking the frozen north Hans Kristian Olsen and Stig-Morten Knutsen of the national oil company Nunaoil talk to Gay Sutton about the prospects for a significant discovery and how they will ensure the Greenlandic people will benefit

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Nunaoil

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Interest is growing among major international exploration companies in Greenland’s oil and gas potential

Nunaoil

G

reenland is one of the world’s enigmas, and surely a fascinating tourist destination for the future. Located at the top of the world, where the Arctic meets the Atlantic Ocean, all but its coastal regions are buried under a massive permanent ice cap. Until now, it has been largely untouched by the Arctic oil race that has been unfolding in Canada, Alaska and Russia, seeing just nine exploration wells by early summer 2010 in its waters (which in size are comparable to the North Sea), over the past 40 years.

Greenland’s waters, however, might also have the potential to be highly productive, according to the frequently quoted CARA (Circum Arctic Resource Appraisal) study produced by the US Geological Survey, and interest is growing strongly among major international exploration companies.

Twenty offshore exploration licences have already been granted to 12 different companies.

The national oil company of Greenland, Nunaoil, is a shareholder in each of the licences with 12.5 per cent (in some places eight per cent) equity and works closely with its partners to progress the exploration.

“Our remit is to promote oil and gas exploration in Greenland, and enable the country to benefit from resources around our shores,” explains managing director Hans Kristian Olsen. With the Greenland economy currently reliant on the fishing industry, shrimp and halibut accounting for more than 90 per cent of exports, possible oil revenues will be of huge importance to

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the development of the nation, which has a population of only 56,500 people.

The last three years have seen a significant move towards this goal. Edinburgh-based exploration and development company Cairn Energy, which operates a number of licences off the west coast in partnership with Nunaoil, was awarded its first Greenland blocks in 2008. Cairn drilled three offshore exploration wells in 2010 and showed the presence of oil and gas.

“Their results could indicate that we have a working hydrocarbon system offshore West Greenland. This is a very significant step forward for us,” says Nunaoil exploration manager Stig-Morten Knutsen. With these results under its belt, Cairn is continuing the exploration campaign and plans four further wells this year.

All of the 20 licence blocks currently granted by the Greenland government are located off the west coast and those blocks are huge, ranging from 8,000 to 13,000 square kilometres. “You could easily fit 20 North Sea blocks into some of these,” Knutsen comments. The conditions attached to the licences are very specific, and are designed to ensure a systematic approach to exploration and to provide opportunities for other companies to assess the acreage.

Lasting 10 years, licences are normally administered in three sub-periods; and the holders must relinquish 30 per cent of their holding between each sub-period.

The current licences are mostly in the first sub-period, which involves geological and geophysical surveys and evaluations. During the second and third periods, the hope is that they will move to drilling operations and progressively focus their activities. By

“Our remit is to promote oil and gas exploration in Greenland, and enable the country to benefit from resources around our shores” 34 | BE Oil & Gas

Nunaoil

Greenland’s strategy is to diversify its economy

Oil is set to play a major part in diversification

the time the exploration licence expires, and if all has gone well, they will make the decision to go on to exploitation and production.

For Nunaoil any shift from the exploration to the exploitation phase will be an important step in many ways. “From our perspective, if a commercial discovery is made and our partner decides to develop the field, we will have to decide whether or not to put our money on the table and participate in the development,” Olsen says. It will be a financially big decision for Nunaoil and of great economic significance to Greenland where the national strategy is to diversify the economy, breaking its reliance on a single product, and reducing its dependence on financial support from

Denmark. Oil is set to play a major part in this.

The next offshore area to come up for bidding is a region believed to be highly promising, located to the north-east of Greenland. The first licences are to be offered preferentially within 50,000 square kilometres in 2012, to the Kanumas Group, which comprises Esso, Chevron, BP, Statoil, Shell and JOGMEC (Japan Oil, Gas and Metals Corporation). Blocks and acreage not taken up in the region will then go to an open round in 2013. “Normally, companies apply for an acreage with a technical programme and work programme detailing what they intend to do, proving they’re technically capable of working in the area, and offering a work programme of how they intend to

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mature the area further,” Knutsen explains.

In its role supporting the maturation of the Greenland oil industry, Nunaoil works closely with its licence holding partners, participating in every technical and operational committee meeting. “One of our strengths is that we partner with every licence holder so we probably hold the best and most complete overview of Greenlandic offshore petroleum geology. We have also

accumulated a great deal of technical knowledge specific to Greenland, and this can be of great benefit to our partners.

Our vision is to grow this capability and become a repository of knowledge for Arctic exploration—after all, we are the world’s northernmost national oil company,” Olsen says. “The other key aspect of our work is that we bring a great depth of local knowledge to the table and we act as the link between

“We have accumulated a great deal of technical knowledge specific to Greenland, and this can be of great benefit to our partners”

Nunaoil acts as a link between the oil industry and Greenlandic society and government

36 | BE Oil & Gas

Nunaoil

Offshore operations are limited to a few months each year

the oil industry and Greenlandic society and government.”

Of course, Arctic exploration has a number of unique technical and operational challenges, many of them associated with the extreme northern climate. “The environment is very harsh, with short summers, long, cold dark winters and winter sea ice and drifting icebergs at sea. Therefore offshore operations are limited to a number of months each year,” Knutsen explains. This is obviously a contributing factor to increased costs and will also most likely see exploration spin out over many years.

There is already a significant body of knowledge and experience in Arctic exploration, developed off the shores of north Canada and Alaska. “Many of our partners

have been involved in Arctic exploration for a number of years. But in regions such as Alaska or North Slope, exploration takes place in very shallow water,” continues Olsen.

“Here, the depths are more extensive, and can range from a few hundred metres to over 1,000 metres.” When this is combined with high winds and drifting icebergs, the challenges are obvious.

Greenland certainly has much going for it in terms of hydrocarbon exploration and development. Not only is it politically stable, but it also benefits from a highly transparent fiscal and regulatory system as part of the Nordic group of countries. From the safety and environmental perspective, the government demands that all licence holders operate to the ‘Norsok standards’,

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Drifting icebergs restrict offshore exploration

Exploration is expected to continue for m

“We expect exploration to continue for many years to come along the Greenland coast” which were developed for the North Sea oil industry, and embody the latest standards of best practice in safety and cost effectiveness.

Meanwhile, great care is taken to ensure seismic and drilling activity does not disturb the rich eco-diversity which includes whale and fish populations. Nunaoil, situated in Nuuk, Greenland, aims to bring local knowledge to these aspects of operations.

With Greenland’s oil industry still in its

38 | BE Oil & Gas

infancy, the infrastructure for exploration and development is still rudimentary. With no roads between towns, and ports not yet developed to accommodate exploration vessels, the supply chains for exploration companies tend to be long and challenging.

Cairn, for example, has been using the port of Aberdeen in Scotland and occasionally St John’s in Newfoundland for its supplies.

Furthermore, it has set up its own

Nunaoil

many years to come along the Greenland coast

charter flight several times a week to and from Greenland for crew and personnel transportation related to its operations.

Looking to the future, if commercially productive regions have been identified, hopefully significant investments can be made to create an onshore service hub and oil facilities, and it’s then that the real benefits will begin to flow through to the people of Greenland.

Work over the last five years has certainly opened a window on what could develop into a significant discovery and oil resource, but this is only the beginning. “We have exploration licences in operation off the west coast and we will soon be launching them in the north-east; but we might also have prospects off the

Much of Greenland is covered by a permanent ice cap

south-east coast and maybe even along the north coast that might be unveiled sometime in the future. So, depending on factors such as oil prices and interest from oil companies, we expect exploration to continue for many years to come along the Greenland coast,” Knutsen concludes.

The next few years look set to be interesting. If only a few of these vast licence blocks turn into productive oil wells, then Nunaoil will have a great deal of work on its hands and Greenland is likely to change forever.

For more information about Nunaoil visit: www.nunaoil.gl

BE Oil & Gas | 39

40 | BE Oil & Gas

Wood Group PSN

From

hook-up to decommissioning

Wood Group PSN’s Australian operations form the company’s largest international business unit, with more than 2,100 personnel now working across five Australian regions

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The 2011 merger created the world’s leading brownfield service provider

42 | BE Oil & Gas

Wood Group PSN

B

ack in 1912, William Wood founded Wood & Davidson, a ship repair and marine engineering firm, to service Aberdeen’s fishing fleet. Fishing in those days was a thriving industry along the east coast of Scotland; but although Aberdeen is still a fishing port, these days it is thought of as an oil town above all. In the 1970s, when oil and gas reserves were discovered in the North Sea, this presented an ideal opportunity to translate marine engineering experience into engineering and support services, and the Wood family took full advantage of the altered situation.

Today, Wood Group is a leading international energy services company, employing more than 34,000 people worldwide and operating in 50 countries.

The company is a leading independent service provider for the oil and gas and power generation markets and is organised under three divisions—Engineering, Wood Group PSN and Gas Turbine Services.

Wood Group PSN is a new entity that came into being when Wood Group’s Production Facilities business merged with Production Services Network (PSN) in April 2011. The US$955 million merger created the world’s leading brownfield service provider with annual revenues of around US$3 billion and a 23,000-strong workforce operating in more than 35 countries. As Bob Keiller, formerly CEO of PSN and now CEO of Wood Group PSN explained: “The completion of this deal is a momentous occasion for both companies. Our aim is for Wood Group PSN to be the best brownfield services company

BE Oil & Gas | 43

Wood Group PSN

Wood Group PSN Australia is one of the most active regional divisions of the merged business

“We want to help our customers to get more from their assets” to work for and the best company to work with. We have excellent relationships across a broad customer base and we have the capacity to invest and develop our people and our processes so that we can offer an unrivalled service.”

Keiller defined the new company’s goals from the outset. “We want to help our customers to get more from their assets; be innovative—do things safer, quicker, better at a competitive cost and provide a global skills network so talent is available where our customers need it,” he said.

However, this is as much a statement of where the company is already. Though its headquarters are in Aberdeen, the merger simply gave the company a larger footprint,

deeper resources and capabilities, and the capacity to add greater value for its customers. One of the advantages of the merged entity over other brownfield service providers will be its ability to deliver a full suite of brownfield services.

Wood Group PSN Australia is one of the most active regional divisions of the merged business, having been serving local customers for more than 14 years. As Australia regional director Matt Gavin puts it: “Australia is the power-house for the global supply of commodities. It’s a demanding environment, and we work closely with our clients to deliver safe, reliable operations at least sustainable cost.

“The merger of Wood Group and

BE Oil & Gas | 45

Wood Group PSN PSN in Australia creates 3B Consultancy Services an organisation with 3B is a privately owned 3Dimensional survey and CAD significant engineering and draughting company. Having originated in Aberdeen, our implementation capability aim is to bring the very best standards to oil and gas fields in all of the major oil and around the world, providing our clients such as Wood Group gas and coal seam gas PSN with improved cost savings and most importantly, centres in Australia offering enhanced safety benefits. Our workforce brings with them decades of experience to their field, whilst utilizing an enhanced and assured the latest technological advances in the discipline. With service delivery to new and our head office in Melbourne, Victoria, we service the existing customers,” he says.

Australian and South East Asian oil and gas markets, as His regional office well as having branch offices in Aberdeen, Equatorial provides solution-based Guinea, and Perth WA. project and integrated www.3bcsl.com.au maintenance services to the oil and gas, refining, chemicals, coal seam gas, and water industries throughout Australia and Papua New Guinea; however, its geographical footprint reflects the global nature of the group. The Melbourne office supports projects in Russia, Vietnam and beyond to Europe, North America, the Middle East and Africa. While there is no lack of greenfield projects coming up in the country, the merged group will be in a good position to utilise its global base of brownfield personnel to lessen competition for skilled workers, says Gavin.

“We work closely with our clients to deliver safe, reliable operations”

The company has significant engineering and implementation capability

BE Oil & Gas | 47

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Wood Group PSN

The company is a partner for the biggest players in the petrochemical sphere

The company is a well entrenched partner MCP AIMS for its maintenance management for the biggest players in the petrochemical in water utilities. Wood Group PSN now has sphere, reflecting the diversity of their needs. more than 2,000 employees in Australia, Wood Group PSN provides an integrated working both on existing long-term suite of maintenance services for Caltex at contracts and projects. its two Australian refineries; brownfield EPC Caltex Australia, the country’s leading oil project services to Esso for their operations refiner, is a new client for the group. Last year in the Bass Strait; and EPC services for the the two companies confirmed the signing of Kipper Tuna Turrum project, which is one a multi-million dollar, three-year contract of the largest domestic gas for the delivery of integrated developments on the eastern maintenance services, under seaboard. The company is which Wood Group PSN equally well versed in civil will provide Caltex with infrastructure projects, maintenance management, recently achieving a worldmechanical and support Number of employees class maintenance audit services at its two Australian Wood Group PSN have ranking from Queensland refineries, Kurnell in Sydney in Australia management consultancy and Lytton in Brisbane. “We

2,000

BE Oil & Gas | 49

“the newly merged Wood Group PSN will be enhanced by the additional resources now available though the group’s global network” were delighted when Caltex selected us,” says Gavin. “The contract is a significant milestone and augments our position as a leading service provider to the refining industry in Australia. This is the first time we have been awarded a contract from Caltex and we look forward to building a strong working relationship and delivering effective, efficient and safe operations in line with Caltex’s vision and our core values.”

50 | BE Oil & Gas

This year has also seen a good flow of new contracts for the Australian company.

In April it was awarded a contract by Woodside Petroleum to support the Browse liquefied natural gas development in Western Australia. The facility, located 425 kilometres north-west of Broome, will help in the distribution of gas from the Torosa, Brecknock and Calliance fields that together comprise the gas fields of the Browse Basin,

Wood Group PSN

Wood Group PSN works closely with its clients to deliver safe, reliable operations at least sustainable cost

at depths up to 700 metres. These fields were estimated to have reserves of 13.3 trillion cubic feet of dry gas and 360 million barrels of condensate as of 31 December 2009, with a field life of 40 years.

In June, the company was awarded a significant contract for work on the GLNG Pipeline Project in Queensland. The project involves the production of coal seam gas in the Surat and Bowen Basins in Queensland, and a 420-kilometre gas pipeline from the gas fields to Gladstone on the coast, as well as a gas liquefaction plant on Curtis Island.

When PSN was brought in to take on the newly outsourced electrical, mechanical and instrumentation services of the Water Corporation of Western Australia, it was able to bring in oil and gas industry practices

to deliver unprecedented performance on safety. Though the quality of service was already high, the company has delivered improved asset reliability and cost savings while achieving 300 per cent revenue growth against a 40 per cent headcount growth over 10 years, during which time the contract has been renewed three times.

This is typical of the breadth of experience behind the newly merged Wood Group PSN that will be enhanced by the additional resources now available though the group’s global network.

For more information about Wood Group PSN visit: www.woodgroup.com

BE Oil & Gas | 51

Afric Oil, South Africa’s first BEE oil company, is embarking on a strategy to achieve security of supply and growth in the marketplace, as finance director Mangadi Dikotla explains to Gay Sutton

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Afric Oil

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Afric Oil sells various oil products to end users in the mining industry

Afric Oil

L

aunched in 1994, Afric Oil is place their order with us and we will place something of a trail blazer. The the order with Engen. Then they will either first black owned and operated use their own transport companies to collect oil company to market and sell directly from Engen depots, or customers refined oil products in the highly such as Eskom will require us to deliver on competitive and exclusive marketplace of their behalf.”

South Africa, it went into operation in 1995 The majority of deliveries are made and quickly established a reputation for by road transport, and the company has excellence and a significant brand identity. developed relationships of trust with a The vision and financial backing that number of logistics service providers to made all of this possible was provided by ensure that deliveries are fulfilled reliably Worldwide African Investment Holdings, and on time. a black owned and managed investment “One of the major milestones in our company that now goes under the name of company development has been an agreement with Transnet Pembani Group. Pembani Pipelines to transport 1.5 continues to hold a 75 per million litres of mainly cent share in the company diesel per week through the while the remaining 25 per Durban to Johannesburg cent is held by another black pipeline.” The agreement owned investment company.

Year Afric Oil launched provides an efficient and cost After 17 years in operation, Afric Oil has effective route for delivering established a nationwide oil from the refineries on footprint supplying into all the major cities the coast to the Transnet storage facility at and a wide range of business and industry Tarlton near Krugersdorp, Johannesburg, sectors. “We essentially trade as agents,” which Afric Oil rents from Transnet explains financial director Mangadi Dikotla, Pipelines. From this facility, the company “marketing and selling various oil products supplies diesel to customers in the country’s to local and national government, other largest city and nearby inland areas.

The global economic recession, of course, distributors and end users such as mining, construction, transport, manufacturing and has had a major impact on fuel sales, but agricultural companies.”

Afric Oil is experiencing a steady recovery The company deals in a broad range of in demand. Perhaps the biggest challenge refined oil products ranging from diesel, facing the oil industry and oil users across petrol and jet fuel, through to paraffin, South Africa today is the shortage of supply lubricants and marine products. Currently, due to infrastructure constraints—and this these are procured directly from the South affects everyone. For Afric Oil, the shortages African supplier Engen. “Our customers have resulted in some difficult decisions.

1994

BE Oil & Gas | 55

“Customers collecting fuel from Durban do not have any limitations. However, with regard to our storage facility in Tarlton, we are allocated 1.5 million litres of diesel a week. In some cases we have to restrict the quantity of oil we can supply. But we keep all our customers informed as to the amount of fuel Afric Oil can offer them.

They know the problems we are all having and they understand the business,” Dikotla says. “Our aim is to keep all our customers happy, and this is doubly important to us because we plan to expand the business in the future.”

Afric Oil’s strategy for growth includes several initiatives to combat the fuel supply shortage. Firstly, the company is planning to begin importing refined oil products to boost supply, and this may begin as early as 2012. “We have submitted an application to the government for a fuel import licence, and we’re now just waiting for approval,” Dikotla says. The import route for the product has already been decided: fuel will enter South Africa from Mozambique—either by ship to Durban Harbour or by road through Mpumalanga Province. “We are further planning to be cooperative with Transnet, other storage leasing companies like Vopak and of course the other oil companies to

address the infrastructure constraints.”

Already a few strides have been made with Transnet completing the New MultiProduct Pipeline, which transports fuel products from Durban to Johannesburg.

The next step is to ensure that the storage in Durban and inland, together with related port facilities, can handle large volumes of product. The reality is that South Africa will be required to import

“We have submitted an application to the government for a fuel import licence, and we’re now just waiting for approval” 56 | BE Oil & Gas

Afric Oil

Agricultural companies are another source of customers

large volumes of product for the next five years to meet demand.

“Due to the historical structural nature of the oil and gas industry, this means that government, oil companies and all stakeholders will have to cooperate and we are hoping to be a catalyst in driving the cooperation,” Dikotla says.

Meanwhile, although the company has always had an excellent working relationship with its supplier Engen, a one time major shareholder, restricting the business to one supplier is seen as something of a risk in terms of security of supply and cost effectiveness. It’s a risk the company is currently looking to address. The search is therefore on to diversify the supply-base and develop a mechanism for lowering

costs for the customer. “We believe we can achieve this. And we’re looking to work with other major oil suppliers, so we’re currently approaching companies such as Total and Sasol,” Dikotla continues.

“Once we’ve done this, we then plan to begin exporting our products to some of our African neighbours,” she says. From the timeline perspective, the plan is to diversify into the export business in one to two years, and to begin with two countries with whom the logistics links are good. “We’re currently looking at the cost effectiveness of exporting to Botswana and Zimbabwe initially. After that we shall be looking further afield.”

Once the supply issues have been addressed and the export business set up, the company will be in a much stronger

BE Oil & Gas | 57

position to begin expanding its customer base in South Africa, and that will be the next step in the expansion strategy. However, significant investments and operational changes will need to take place in the business in preparation for such expansion.

And making those changes is likely to be a major undertaking.

“Many of the major end users that we would like to attract are looking for suppliers

who have their own storage facilities and their own reliable transport fleet, and are able to provide fuel management systems.

And that’s a real challenge for us,” Dikotla explains. “Many of our major competitors are multinational companies and we’re still a small company. But once we’ve closed all the loopholes in the supply we will begin exploring such things.”

The company is already looking to forge

“We’re looking to work with other major oil suppliers, so we’re currently approaching companies such as Total and Sasol”

Afric Oil is South Africa’s first BEE (Black Economic Empowerment) oil company

58 | BE Oil & Gas

Afric Oil

A firm emphasis is placed on gender empowerment

relationships with companies like Vopak, the global leader in fuels storage facilities, and will be re-evaluating its logistics capabilities and the viability of sourcing a suitable fuel management system.

Undoubtedly Afric Oil has led the way in South Africa, not only as the country’s first BEE (Black Economic Empowerment) oil company, but also in achieving a BEE rating at level three last year. “We are only a small company,” Dikotla concludes, “and for us this is an achievement, because it looks at the ownership of the company, business development, skills development, procurement and so on. It means we have been able to invest in our staff and suppliers including customers.”

In addition to Black Economic Empowerment, a firm emphasis is also placed on gender empowerment at Afric Oil, with women broadly taking charge of day-to-day operations—a principle that is very important to the company as it moves forward.

By investing in progress in such a way, as the company transitions from a small to medium sized enterprise, the benefit is likely to be felt by a much wider community.

For more information about Afric Oil visit: www.africoil.co.za

BE Oil & Gas | 59

Bridging the North Sea Bridge Energy’s balanced portfolio of exploration and production oil and gas projects across the North Sea makes it an attractive investment as it sets out to list in London as well as Oslo

60 | BE Oil & Gas

Bridge Energy

BE Oil & Gas | 61

Tom Reynolds, deputy CEO of Bridge Energy

Bridge Energy

E

stablished as recently as March The first of these was to acquire a 50 per 2010, Bridge Energy is now at a cent working interest in the Duart field in critical stage in its growth and is the central North Sea. Bridge paid Nexen coming to the end of a year that Petroleum around $38 million for the field. has demonstrated impressive “We tried to identify a list of assets that made progress. The company was formed out sense for us in terms of their operational of a merger between Bridge Energy AS of characteristics and also their value and cash Norway and Silverstone Energy Limited, characteristics,” explains Tom Reynolds, based in the UK, and it has offices in both deputy CEO of Bridge Energy. “Duart Aberdeen and Oslo. Bridge listed on the Oslo was one of the ones we identified in that Stock Exchange in May 2010, presenting process.” It was a win-win situation for both itself as having a very competitive combined parties, he says, with Nexen happy to realise portfolio of exploration licences as well as the value of an asset that was being heavily taxed while enabling Bridge Silverstone’s gas producing well in the Victoria field. to double its cash flow at a Cash flow is king in the stroke. Bridge, on the other North Sea exploration and hand, has a considerable ‘tax pool’ against which it production (E&P) business. can offset UK tax liability, Ack nowledg ing t hat, investors who put their and in any case the strategic Bridge Energy money behind long-term, value of the field as a source established high risk and very costly of present revenue was a resources companies have compelling attraction.

Since it was able to make this acquisition understandably become a good deal more cautious. Bridge Energy already stands using its own cash and credit facilities, out from many of its peers in having these additional revenues will put the linked production and development company in a stronger position than ever, assets, primarily in the UK sectors of a position that will be enhanced next year the North Sea, with a large number of when it has been able to drill new wells in exploration licences further north in the Victoria field in the next phase of that Norwegian waters. The point is that project. A rig is being sought to drill this where competitors have to rely on their well, and first gas production is expected to shareholders and banks to fund further be delivered by the end of 2012. This project development, Bridge is rapidly developing will make a significant impact on Bridge a position of being able to do this from its Energy’s production, Reynolds believes: own resources—and investors like that.

“Together with the planned Victoria Phase In recent months the company has taken II development, using only our existing cash several long steps towards reaching its goals. resources, Bridge’s production will treble to

march 2012

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Bridge Energy

New wells are planned for the Victoria field in the next phase of the project

around 3,700 barrels of oil equivalent [boe] support the Victoria Phase II development. per day by the end of 2012 and significantly The key message to investors is that here enhance our ability to fund further growth is a company that is able to fund itself at a from cash flow.” self sustaining level of cash flow which will The mid-term aim is to self-fund the support growth acquisitions and production, drilling it plans to do on four of its Norwegian as well as exploration growth through the assets in 2012. Meanwhile the Victoria drilling projects that are in hand—to the Phase II development has to be paid for and extent that the rigs have been found and the Bridge has agreed a banking support services booked. deal with the Royal Bank of North Sea gas is not won Scotland to make these funds easily. New acreage offered by the Norwegian and UK available. That credit facility refinances the existing debt governments is picked over by a large number of companies. on Victoria Phase I, issues new dept to support the “We compete in the market Barrels of oil equivalent Duart transaction and it for both licences and assets— per day by end of 2012 also makes debt available to like the Duart asset we just

3,700

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acquired,” says Reynolds. “It comes down to technical ability and the ability to offer a robust work programme that makes you competitive in the government process. The other area we compete in is people. There is a rather narrow talent pool for upstream gas activities in the North Sea. We have suffered from people moving abroad. To be able to offer something interesting and exciting in a growth company you need to be clear and also hope people are savvy enough to look for a vehicle that is funded for its activity plan.”

All these things combine to place Bridge at that crucial point where it can demonstrate to all its stakeholders— whether governments, investors, or employees actual and potential—that it has a good story to tell. “We are at that point,” Reynolds insists. “The momentum that has been set up by recent announcements on acquisition and refinancing puts us in a very strong position to demonstrate we can fund our growth plans in the near term. That certainly provides us with the momentum in the market from an investor perspective: it also brings in the other key resource, the human one. We can attract people to our story if we can demonstrate that funding plan.”

In its latest quarterly report, Bridge Energy

identifies five key strategies or goals. The first is to confirm the growth schedule and activity plan we have described, the third is to identify and acquire assets such as Duart, the fourth is to accrue more exploration assets and develop the existing ones—the 2012 drilling programme— and the fifth is to secure financial resources such as the RBS debt funding. These have all been to a large extent achieved or are well

“Moving to the AIM market introduces the company to a broad new group of investors” 66 | BE Oil & Gas

Bridge Energy

Falcon Viking standby boat

progressed, so that just leaves the second: to improve liquidity in the market.

Essentially this means opening up trading of Bridge shares to more investors. Nobody needs reminding that European markets are depressed right now and Bridge, on the Oslo Stock Exchange, is no exception. “The value of the business is in no way recognised in the value the trading screens give us on a day to day basis,” Reynolds admits. “Despite the acquisition and all our growth potential our pricing has been largely static.” He is not despondent: 18 years’ experience of investment in energy markets tells him that the markets always follow value, given time.

However in the short term Bridge wants to improve its market position and part of

that, Reynolds says, is to broaden the equity beyond the Oslo Stock Exchange.

For some months Bridge Energy has been working towards listing on the LSE’s AIM market, home to many energy stocks round the world. A dual listing would enable Bridge to widen its narrative, he feels. “Moving to the AIM market introduces the company to a broad new group of investors who may be aware of the company but may not choose to invest up till now—we will be a lot more visible to a lot more investors.”

For more information about Bridge Energy visit: www.bridge-energy.com

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Hunting for elephants 68 | BE Oil & Gas

Otto Energy

Otto Energy has been producing oil from its assets in the Philippines for the last three years, and has fantastic prospects going forward: it is all about balance, say its senior executives BE Oil & Gas | 69

Rubicon Intrepid during repairs in Batangas port

Otto Energy

W

hen it listed on the field, being developed by a joint venture in Aust ra lia n Stock which GPC has a one-third stake. GPC is Exchange back in now wholly owned by Otto Energy, following 2004, Perth-based Otto the purchase of the majority shareholding Energy was purely in previously held by Vitol Group. GPC was set the business of oil and gas exploration, up as a Vitol subsidiary in 2005; however, as putting together a portfolio of properties in time went by and Otto developed, the field areas it thought had potential, and focusing became strategically much more important on the Philippines. In 2007 it graduated to Otto, for whom it represented a very into being a production company too, when attractive opportunity, and less so to Vitol it bought a share in the Galoc Production as the latter turned its attention to interests Company (GPC). Today it is in the enviable it has in West Africa. position of having strong cash flow from Galoc was the launching pad for Otto its initial producing wells, firm plans to in the Philippines and to date the two increase that, prospects of wells that comprise Phase considerably more, and a I have yielded more than credible strategy to extend eight million barrels of oil. its successful business model “There’s good follow-up potential there,” says into other parts of the world.

Otto’s Philippines country There’s a 1,000 kilometrePerth-based Otto Energy long oil and gas ‘fairway’ that manager, Ross Prasser. “The listed on the Australian runs from the north-western Galoc field has produced Stock Exchange coast of Malaysia all the way well since start-up, and that gives us the encouragement past the Philippines island of Palawan and up to Mindoro to the south to study potential additional wells into of Manila and the main island Luzon—and untapped parts of the field. We have just it is relatively underexplored. Compared to launched into a pre-investment study on the other countries that border the South Galoc Phase II that will be going on over China Sea/West Philippine Sea—Vietnam, the next few months.”

Malaysia, Indonesia and China itself—few The front-end engineering and design of the major players have come in yet, says (FEED) process will decide the number CFO Matthew Allen, and the waters off the and location of the additional wells that will Philippines were really only re-opened for be drilled and the infrastructure that will business in the late 1990s, though interest be needed, including wellheads, flow-lines is rising now. and umbilical lines. Final project approval Otto has four active projects, or service is scheduled for mid-2012, and Otto hopes to contracts, with the Philippines Department start drilling in 2013. As a preliminary, the of Energy. The most advanced is the Galoc Rubicon Intrepid FPSO (floating production,

2004

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Otto Energy

Rubicon Intrepid crew transfer

storage and offloading) vessel is having its mooring and riser system upgraded.

Meanwhile a team has been assembled in Perth to undertake the FEED study.

For Otto, it is a really exciting and indeed essential project that will take investment of around $140 million. “We now do most of the work ourselves, which demonstrates Otto’s increasing capability as an operator through the development and production phases,” says Prasser.

To avoid any doubt as to precisely what is down there and where it is, a seismic survey is now in progress over 71 square miles of the Galoc field. This highly specialised work is being carried out by China Oilfield Services Limited and is a bit like a gargantuan

ultrasound scan that can create a map of underground resources. “It gives us much better imaging of the reservoir and a better idea of where the sweet spots are,” says Prasser. “That will help us in positioning additional wells.”

Further south, off the island of Palawan, Otto has a one third interest in Service Contract 55, covering nearly 10,000 square kilometres with significant hydrocarbon potential. The Philippines government is extremely keen on the possibility of discovering further large deposits of gas to complement the Malampaya project operated

by Shell. The Holy Grail is to discover the next multi-TCF (trillion cubic foot) gas deposit in the Philippines. “We are looking

BE Oil & Gas | 73

“We have been engaging with governments and potential joint venture partners over the last year, and maturing various opportunities” for the elephants in this block,” says Allen.

But it lies in deep water, between 400 and 2,000 metres down. “This block needs a competent deep water operator and BHP Billiton, which operates in the deepwater Gulf of Mexico and Australia, has the experience to drill these wells,” says Allen. BHP Billiton is bringing in a lot of money and expertise, funding wells that will cost around $70 million each, and the

74 | BE Oil & Gas

participation of a major oil and gas player like BHP Billiton in this block reinforces the prospectivity of the area. “A major player of the calibre of BHP Billiton supports our view of the Service Contract 55 area as a major unexplored play with high potential, in fact one of the last underexplored areas on the South China Sea/West Philippine Sea rim.” A rig has been secured, and drilling will start in the second quarter of 2012.

Otto Energy

Rubicon Intrepid in Galoc field 2

With the BHP Billiton farm-in agreement and the Galoc acquisition, 2011 has been a very significant, indeed critical, year for Otto Energy. It is clearly going to be very busy in 2012 too, with two other projects at an advanced pre-drilling stage in the Philippines, including a very exciting onshore hydrocarbon prospect on Leyte that is due for seismic follow-up next year.

One of the great advantages for an Australian company working in the Philippines is that it is geographically close, in the same time zone even. But Otto is also looking further afield, for opportunities in relatively undeveloped regions. A promising area is the Rift Valley of East Africa, says Allen: “We are looking for onshore opportunities to balance our offshore

portfolio in the Philippines—we have been engaging with governments and potential joint venture partners over the last year, and maturing various opportunities.”

Balance is the key word, and Otto Energy has it in spades. It has cash flow from existing operations, interests in both oil and gas, is developing geographical spread—and it has those elephants in clear view. That’s a picture that investors will find attractive as the world economic horrors abate and they start to look more kindly on medium-risk, high return prospects.

For more information about Otto Energy visit: www.ottoenergy.com

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Filling the pipeline 76 | BE Oil & Gas

Al Khadda International General Trading & Contracting

One of Kuwait’s oldest pipeline construction companies is gearing up for growth. General manager Mohammad Al-Hazza’a talks to Gay Sutton about strategic partnerships and the value of longstanding staff loyalty

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For companies operating in the construction and maintenance fields, the opportunities are significant

Al Khadda International General Trading & Contracting

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or Kuwait, nestling at the head and our people play a large part in this,” of the Arabian Gulf, oil is its explains general manager Mohammad life blood. Some 80 per cent of Al-Hazza’a. “We currently have a workforce government revenue is generated of around 300, although the numbers vary by oil, and the country is sitting depending on the size of the projects we over around 10 per cent of the world’s proven are working on. But we are proud of our oil reserves. Meanwhile, the importance staff loyalty: a number of people have of this precious commodity is only set to been with the company for more than 25 increase in the future. The aim is to increase years. As a matter of fact, we celebrated output from the current rate of 2.8 million this staff loyalty last month and held an bpd to four million bpd by 2020, and a awards ceremony for 45 people who have considerable investment is being made by been with us for more than 15 years.” the state to prepare the infrastructure for Born in 1953, Al-Hazza’a obtained his BSc in Mechanical this increased output. So Eng ineering f rom for companies operating Southern Illinois in the construction and ma i ntena nce f ield s, University in 1976. He now the opportunities are has 34 years of experience significant. in the oil and gas sector, of Kuwait’s share of the Specialising in turnkey which 22 years was spent world’s oil resources oil pipeline engineering, with Kuwait Oil Company, procurement a nd three years with Parsons construction projects, Al Engineers, four years with Khadda International General Trading Fluor, two years with Kharafi National & Contracting is one of Kuwait’s oldest and the past three years with Al Khadda. pipeline construction companies, and Al-Hazza’a puts this extensive experience also provides materials and equipment to good use, ensuring that the company is procurement services for other companies continuously working to draw its genuinely operating in the oil industry. Over a long multinational team together. English and period of time, Al Khadda has established an Arabic are the languages of communication; enviable reputation among the oil industry but the success of the morale building goes for innovation, hard work and reliability. much deeper. There are the usual range Launched in 1960, the company has thrived of lucrative bonus schemes for good work and developed under the stewardship of performance, and attractive living quarters. three generations of the Al Khadda family But staff and the workforce are treated as and trades today as a subsidiary of the individuals. “We also try to accommodate Equipment Holding Company. their problems when we can,” states “Our reputation is very special to us, Al-Hazza’a.

10%

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Weekly Because a month is a long time to wait...

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Al Khadda International General Trading & Contracting The majority of work is Saqar Al Jazira performed by the company’s After 26 years of service to the energy sector, our own employees, although commitment to our customers remains as fresh today as some of the more specialised it was in our first year. Our reputation is testament to our or non-core work such as guiding principles of fair pricing, on-time delivery and excavation is sub-contracted honest dealings. We do not do everything, but what we out. However, while the sheer do do, we do well. sajco@sajco.fasttelco.com number of construction projects currently going on in Kuwait is good news for companies like Al Khadda, it does present some problems. “Finding skilled people is an issue for us, especially on the construction side,” Al-Hazza’a reveals. When larger contracts are gained, the company often has to look further afield for staff and runs recruitment campaigns in places such as India, for qualified and experienced staff.

“We do try to recruit young people locally where we can, and we provide a mixture of outside and on-site training,” he says.

In the oil industry, time is money. Most contracts are time-critical, and the company works very closely with its clients to achieve completion in the expected timeframe.

Interestingly, it’s not the construction element of the process that presents the greatest challenge. “Our clients require approval for a range of documents and this is a timeconsuming process. So one of the challenges Preparing for an increase in Kuwaiti oil production

“We are proud of our staff loyalty: a number of people have been with the company for more than 25 years” BE Oil & Gas | 81

for us is to gain this approval in time,” Al-Hazza’a says. “There are different teams involved in this process, and they operate in different cycles, so we begin cooperating directly with them at an early stage.”

Having a long established working relationship with the teams involved in this process plays an important role, not only in speeding up the approval processes but also in addressing construction issues as and when they occur. This relationship has been developed over a long period of time, and has been enhanced by the knowledge brought to the company by its employees—including Al-Hazza’a himself with his 22 years as an employee of Kuwait Oil Company (KOC), one of Al Khadda’s major clients. “I know how they think and how they deal with issues, so I know how to approach projects with KOC. For me, it’s quite a personal thing.”

With Kuwait’s oil industry dating back to the early 1930s, there is a continuous need for rehabilitation of existing infrastructure, paying particular attention to the environmental requirements of this sensitive environment. And Al Khadda has taken part in this upgrade process. Between 2007 and 2009, for example, the company constructed a new 18 inch pipeline to replace

There is a continuous need for rehabili

the corroded one—25 years old—that brought natural gas across a distance of 28 kilometres to the Shuwaikh Power Station. Meanwhile, as a temporary measure, gas was being piped all the way in from Doha West.

“Oil contamination is a very serious issue in Kuwait, especially after the invasion and liberation,” Al-Hazza’a explains. “We therefore take great steps to ensure our work is environmentally

“We do try to recruit young people locally where we can, and we provide a mixture of outside and on-site training” 82 | BE Oil & Gas

Al Khadda International General Trading & Contracting

itation of existing infrastructure

sound, that there’s no oil spillage, and that our equipment is running cleanly.”

Looking to the future, the company’s strategy is to form joint venture partnerships with large international companies, to enable it to bid on larger and more prestigious contracts and establish the next phase of growth. “We are currently in communication with two international companies in India and one from Egypt,” Al-Hazza’a says. “And for them, the benefit is to gain a toehold in Kuwait.”

The opportunities ahead are lucrative.

Plans are in place to build a new four billion dinar oil refinery at Al-Zour which will ultimately process some 615,000 barrels of oil per day. “This will be one of the biggest refineries in the Middle East,”

Most contracts are time-critical

Al-Hazza’a says. “And if we work hand-inhand with an international partner, we hope to be working on it.”

The other major project that Al Khadda has its eyes on is the Clean Fuels Project, which involves upgrades to two of Kuwait’s existing refineries, so that they produce cleaner burning fuels. The two refineries approved for the upgrades are Mina Al-Ahmadi and Mina Abdulla, which have capacities of 460,000 and 270,000 barrels per day For more information about Al Khadda International General Trading & Contracting visit: www.alkhadda.net

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84 | BE Oil & Gas

PanAfrican Energy Tanzania

Against a background of accounts that Iran is oil-rich but petrol-poor, Alan Swaby looks at Tanzania, which is gas-rich and electricity-poor

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Aerial view of site on Songo Songo Island

PanAfrican Energy Tanzania

I

t’s all very well wanting to be green with a sustainable energy policy; but if nature doesn’t play ball, then as the Scottish poet Robert Burns tells us: the best laid plans of mice and men oft go astray.

If all goes well, Tanzania should be able to produce a little more than half its 900MW energy needs from hydro-electricity. In fact, prior to 2004, when the Songo Songo Gas-to-Electricity Project came on-stream, hydro and a collection of heavy fuels were the only source of electricity. The trouble is, though, that when it doesn’t rain, the hydropower turbines don’t turn. As a result, the Songas gas processing plant (operated

by PanAfrican Energy Tanzania) on Songo Songo Island, 230 kilometres south of the major commercial centre of Dar es Salaam, is already working above design capacity to meet the ever rising demand for energy. The plant has been temporarily re-rated to try and alleviate the problem.

“Through a production sharing agreement (PSA) with the Tanzania Petroleum Development Corporation (TPDC), PanAfrican Energy Tanzania explores, produces and markets additional gas from the Songo Songo gas field,” says PanAfrican Energy Tanzania’s deputy general manager William Chiume. “The PSA is an internationally-recognised contract that governs our relationship with TPDC.” Gas was found in the seas around Songo Songo Island as long ago as 1974; but at the time there was no infrastructure in place to get the gas from the Indian Ocean to where it was really needed in the former capital city and principal industrial heartland. But

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PanAfrican Energy Tanzania in October 2001, agreements were signed that led to the development of the Songo Songo Gas-To-Electricity Project, comprising three major parts: processing facilities in Songo Songo Island, a 230 kilometre pipeline from Songo Songo to Dar es Salaam, and the Songas Ubungo Power Plant in Dar es Salaam.

PanAfrican Energy—a subsidiary of Orca Exploration—is part of the original upstream partnership, responsible for extracting the gas and operating the processing plant on Songo Songo Island.

The demand for electricity in Tanzania

is such that there is already load shedding. To alleviate the problem, Songas is developing a project to expand the gas supply system by installing two new gas processing trains and a compressor in the pipeline that will bring total throughput capacity to 140 million standard cubic feet per day (MMscfd).

“Concurrently, we are drilling a new production well which will come on-stream in 2012,” says Chiume, “and will recomplete one of the production wells with a larger tubing in order to produce more gas. We are also undertaking further exploration

Weatherford Tanzania As one of the largest oilfield services companies, Weatherford operates in more than 100 countries and employs approximately 55,000 people worldwide.

With offerings that span the life cycle of a well—drilling, evaluation, completion, production and intervention—and a robust research and development effort, we are well positioned to meet the ever-evolving needs of the oil and gas industry. We support operations in Tanzania through a network of permanent offices in countries throughout the region, including Kenya and South Africa.

PanAfrican Energy is among the local clients we proudly serve.

With an extensive formation evaluation portfolio, Weatherford is uniquely positioned

to acquire, integrate and interpret datasets that inform critical reservoir management decisions. In addition to conventional openhole wireline logging tools, we have small-diameter Compact™ tools, which offer several conveyance options to ensure data delivery, even in challenging environments.

Our surface logging capabilities range from basic mud logging to advanced wellsite geochemical analysis. Vital to real-time data acquisition, our LWD systems have set multiple performance records and our global network of laboratories—Weatherford Laboratories—provides various evaluation services, including core sample analysis. www.weatherford.com

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Trenching, Excavation & Pipeline laying

Mobilization / Rig & well site Preparations for gas exploration

Marine logistics

Camp Management

Rig move

Official contractors for the PanAfrican Energy Tanzania Ltd in the Songo Songo gas-to-electricity project.

Combined force leading to Tanzania’s growing electrical demand with domestic energy resources.

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PanAfrican Energy Tanzania

Daughter station which provided compressed gas

in Songo Songo West (SSW) so that we are the government’s tax base and increases the prepared to use additional capacity that we capabilities of the country at large. It’s a real hope will be developed.” win-win situation.”

All of which is good news for PanAfrican So it’s all a bit chicken-and-the-egg at Energy Tanzania, as it will allow more the moment. Demand is high and there additional gas to be delivered to Dar es is all the gas the country needs below the Salaam, and potentially other markets. waters; but users are being restricted due to “Currently about 80 per cent of the gas a lack of capacity in the system. PanAfrican produced,” explains Chiume, “goes into Energy Tanzania is doing what it can by electricity generation; but the remainder squeezing the last drop of productivity from is sold to industries. We the plant; but any real relief have customers ranging won’t happen until Songas’ from cement and glass expansion of the plant manufacturers to one of comes on-stream in 2013.

Dar es Salaam’s premier Parent company Orca hotels buying gas directly Exploration has mapped and Gas produced which from us and we want to be evaluated the SSW prospect goes into electricity able to expand this market. adjacent to the Songo Songo generation field and is planning to drill This creates jobs, increases

80%

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• Production and Processing equipment for crude and natural gas • heating equipment, indirect water bath heaters, boilers, heat exchangers • natural gas conditioning and treatment packages • produced water, bilge water, treatment of water containing oil traces

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PanAfrican Energy Tanzania

Wells

and test the prospect during 2012. It could have been earlier but there is a scarcity of jack-up drilling rigs suitable for working in the 18 to 35 metre waters—or at least a scarcity of rigs willing to make the journey to Tanzania for relatively little work and still charge a reasonable rate. However PanAfrican Energy Tanzania has found another local exploration company needing a similar rig and together, the two of them are sufficiently appealing to have now attracted serious interest from a drilling contractor.

In 2008, McDaniel & Associates conducted an independent assessment of natural gas resources in the SSW prospect and interpreted the data to be low-risk, with a 52 per cent chance of success—exceptionally

high for an exploration prospect.

Orca is planning to drill an initial exploration well towards the south of the SSW structure, approximately 2.5 kilometres west of the main field. If it is successful and can flow at commercial rates, the plan is to tie the well back to the existing processing plant and let it flow for a period of time to prove up the long term deliverability of the gas.

If hopes are realised, SSW would represent a major new reserve in the area, to the great relief of Tanzanian consumers in general.

For more information about PanAfrican Energy Tanzania visit: www.orcaexploration.com

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94 | BE Oil & gas

South African Oil and Gas Alliance

An upstream

journey Sub-Saharan Africa holds some of the world’s biggest hydrocarbon opportunities. Warwick Blyth, executive director of the South African Oil and Gas Alliance (SAOGA) tells Jayne Flannery why South Africa offers the perfect local base for a fast-expanding hub of activity

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South African Oil and Gas Alliance

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Aerial view of Takoradi Port, Ghana

owhere on earth is the oil map evolving as rapidly as in sub-Saharan Africa. The initial focus on the Gulf of Guinea has now been joined by an avalanche of new discoveries, most recently off the eastern coast and in the Rift Valley. To date, 25 African states in all have identified oil or gas reserves.

Initial efforts have focused on oil production and proven reserves in subSaharan Africa stand at around 70 billion barrels, but estimates are growing all the time and the potential of Africa’s vast oil sands has barely been mapped. Gas production is also in its infancy, but it is estimated that there are trillions of cubic feet to be accessed within the continent and offshore.

Warwick Blyth is executive director of the South African Oil and Gas Alliance (SAOGA).

He is keen to draw attention to the palpable excitement that Africa is generating within the sector. He is also keen to point out that nowhere else compares with South Africa as the ideal base to develop the myriad of opportunities that early exploration is identifying in the SADC region and beyond.

It is the geopolitical character of African reserves that makes the continent attractive in the first instance. Huge strides forward in the political stability of a number of oilproducing states have taken place in recent years. Many high profile conflicts have been consigned to history and there is a new political will among African leaders to leverage their hydrocarbon resources as the key to economic and social development.

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South African Oil and Gas Alliance “No other environment is as dynamic as this,” he states. “Over the last 10 years, Angola has moved up to achieve near parity with Nigeria as an oil producer and there has been a massive increase in activity in the Mozambique Channel over the last two years. We have significant recent oil discoveries in Ghana, Equatorial Guinea and growth in Gabon. In Uganda, one billion-plus barrels have been identified and proven, which is particularly interesting as it is a major onshore discovery which takes in the whole of the Rift Valley.

We don’t yet know what lies beneath the vast rainforests of the Democratic Republic of Congo, but it is likely to be something

very interesting. Northern Mozambique and southern Tanzania meanwhile have also recently made significant gas discoveries.”

South Africa, he points out, offers all the benefits of proximity with equal ease of access along both the east and west coasts. Meanwhile, the maritime focus of its trajectory of development makes it an ideal base for the host of new deepwater projects taking place off Africa’s coastline.

SAOGA, a non-profit organisation, has the remit to promote the development of South Africa-based suppliers of products and services to the upstream oil and gas sectors. The organisation operates as a

AllWeld Marine & Industrial

AllWeld Solutions

Allweld, a South African based marine and industrial engineering company, has been servicing the Southern and Western African market for almost 50 years. Traditionally established as a specialized welding and jobbing operation for companies involved in the local industrial and marine industry, Allweld has in the past number of years progressed into the broader sphere of transacting directly with leading local and international companies, Allweld’s mantra being: “The Best in the Weld”.

Allweld Solutions was established in mid2008 with shareholders Simona Bovetti and Leigh Elves (also managing director of Allweld Marine & Industrial), to provide practical welding training and competency (coding) certification in a structured, dynamic, professional working environment ensuring their success in becoming gainfully employed.

Our comprehensive database then in turn offers this skilled labour at competitive rates to industry and includes coded welders, pipe fitters, boilermakers, fitters, turners, heat treatment technicians, valve fitters, semiskilled and general labourers.

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South African Oil and Gas Alliance partnership between the DAMEN Shipyards Cape Town public and private sectors DAMEN Shipyards Cape Town (DSCT) is part of the and is publicly funded to Damen Shipyards group. Damen employs over 6,000 carry out a range of industry people, operates 35 shipyards worldwide and delivers up to development activities. It is 150 vessels every year. Based on its unique, standardised SAOGA’s ambition to see ship-design concept and short delivery times, Damen is South Africa’s contribution able to guarantee constant quality.

DSCT builds offshore patrol vessels, dredgers, tugs, to the oil and gas sector naval craft and platform supply vessels, especially for move steadily up the value clients on the African continent. With a BBBEE-rating of chain, hence the focus 3 and a NIP-offset of 38 per cent, Damen is truly embedded on upstream activities in South Africa and committed to building high-quality where the greatest value ships. DAMEN Shipyards Cape Town: building in Africa, is to be realised. for Africa.

At present, there is a www.damen.co.za membership base of about 170 private sector companies and Blyth is quick to point out that it is growing the level and scale of upstream activity that drives the organisation, rather than increasing its membership. “Our membership represents a range of sectors,” he explains. “One of the biggest is the repair and maintenance sub-sector focusing on ships and rigs, but also on the service and maintenance of equipment, either in situ or by bringing it to South Africa where we have excellent facilities. We also have a significant fabrication capability which represents another cluster of members along with a number of major upstream global exploration and production companies like Baker Hughes, Schlumberger and Weatherford which have a well-established presence here. A fourth area is general engineering services which takes in many specialisms such as geological and environmental and maritime services and then there are many equipment, logistics Semi-submersible rig, offshore Ghana

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South African Oil and Gas Alliance and materials suppliers, both domestic and international, which have operations here.�

As well as an excellent geographical location, South Africa offers a number of deep ports, including world class facilities at the emerging oil and gas service zone in Saldanha Bay, near Cape Town, which focuses on repair, maintenance and supply activities. South Africa also has the best international air connections anywhere on the continent and it benefits from some of the easiest logistics in Africa as a result of the free trade agreements that are in place right across the SADC region.

The strength of the South African economy and its business and institutional

inf rastruct ure a re unparalleled. Politically and culturally, there are many business advantages. “It is a highly attractive place to locate personnel and to find supporting services and infrastructure. Take rig repair, for example. We can offer high quality, accessible quay space and the whole chain of electrical and engineering expertise needed to underpin operations. As a legacy of our mining industry, South Africa has a world-class engineering capability and a pool of highly skilled people which is simply not to be found anywhere else in Africa,� he explains.

South Africa-based companies have built up a rich level of experience in the

Matrikon Moore Matrikon Moore is a South African company that specialises in providing cutting-edge process automation and optimization solutions to local and international clients.

The company operates in a number of industries but has a strategic footprint in the Oil & Gas Industry.

The company was founded in 1984 and has a strong reputation for excellence and service.

Matrikon Moore is a medium sized company and employs around 70 people. The company is BEE, ISO and OSH compliant.

The company is solution driven and believes in multi-skilling. The business

offers a complete range of services from initially scoping the project, system design, engineering configuration, internal testing right through to final commissioning and site acceptance testing.

Matrikon Moore believes that industrial automation will continue to grow exponentially as the world looks to increase production and efficiencies. The company is therefore positioned strategically to handle these global requirements. info@moore.co.za www.moore.co.za

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Specialises in maintenance and repairs to seagoing vessels and is a world class provider of technical education and training within the maritime and general engineering industries

JTK ensures skills development for the young, old, disadvantaged and the disabled in a manner that prepares them for the global labour market.

T: +27 (0)21 511 0021 E: info@JTKMarine.co.za www.jtkmarine.co.za

JTK MARINE engineering

South African Oil and Gas Alliance Specialises in maintenance and repairs continent, but Blyth believes “For example, oil production to seagoing vessels and is a world class the challenges of operating continued throughout the provider of technical education and in Africa impact in very civil war in Angola. The training within the maritime and general different ways. “It is almost as engineering industriesDemocratic Republic of Congo remains one of the if two distinct industries are biggest challenges because operating,” he says. “Firstly, of the weakness of central there are the companies government, which means that spearhead resource that no one is sure who to extraction which must deal with. The security of overcome the initial barrier of obtaining licences. Then there are the licences is fundamental if foreign investment logistical and environmental challenges faced is to be made.” by the service companies that sit beneath.”

However, almost all countries now He believes that the global oil and gas recognise the need for foreign expertise JTK ensures skills development for the young, old, have and production sharing agreements sector has proved adept at managing difficult disadvantaged and the disabled in a manner that geographical and political environments. become easier to negotiate as governance prepares them for the global labour market.

JTK Marine Engineering

T: +27 (0)21 511 0021 E: info@JTKMarine.co.za www.jtkmarine.co.za

JTK Marine & General Engineering Academy specialises in maintenance and repairs to seagoing vessels and is an accredited production and training academy. We provide and manage bespoke training to meet maritime and industrial requirements with particular emphasis on the on and offshore oil and gas industry.

We service all classes of vessel and we can manufacture any parts required in the industrial and maritime fields. We provide training to bridge the skills gap and assist companies to meet training requirements and comply with local and international legislation. JTK aspires to be a world class provider of technical education and training within the maritime and general engineering industries.

We have a fully equipped factory and

JTK MARINE engineering

highly skilled manpower. We have achieved our requirement as a recognised supplier through customer satisfaction, on-time delivery, maintaining the highest quality standards and our health, safety and environmental awareness.

Our services are in the following fields: dry docking and manufacture of shafts and bearings; machining, boring and toolmaking; mechanical and diesel engines; hydraulics and pneumatics; steel work and pipe fabrication; separators L/O, F/O; watermakers and boilers; electrical; refrigeration; pumps and valves; gearboxes and clutches; Marine Motorman Grades 1, 2 & higher; oil/greaser; commercial diving training; arrangement of trade tests. www.jtkmarine.co.za

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has improved, leading to the ringfencing and prioritisation of hydrocarbon extraction. “What we see now is increasing pressure on governments by people and electorates for global companies to leave an in-country legacy of a solid industrial and economic base. There are still many barriers to developing domestic industry such as weak supporting infrastructures, limited education and the absence of an entrepreneurial mindset. Trying to drive more diversified economic growth through the use of oil resources is a very complex challenge for African governments, but we are seeing a much greater commitment to making this happen,” he says.

“We believe that we can lead by example in the push towards an indigenous capability.

South Africa has a highly developed and sustainable industrial economy and we think we can help to build that capacity elsewhere. To date the oil and gas sectors have largely developed offshore and so to some extent have been isolated from security risk and the wider political and economic implications of their operations, but that is changing as the scale of activity gathers pace.”

He believes that SAOGA can contribute even more effectively to the development

of the industry in Africa if it can succeed in attracting a wider global membership and consolidate South Africa’s position higher in the value chain. Blyth explains that most of the activity in sub-Saharan Africa involves ‘mega-projects’ which cost billions of dollars. For example, Chevron’s BBLT Project in Angola comes with a capital investment requirement of $4 billion. The Jubilee Project in Ghana—a deepwater

“It is my hope that we will see a growing number of South African industry partnerships which twin our local expertise with trusted global names” 106 | BE Oil & gas

South African Oil and Gas Alliance

Kwame Nkrumah FPSO leaving Singapore en route to Ghana

offshore oil field set to produce 600 million to one billion barrels of reserves—is even more expensive with an investment price tag of $5 billion dollars.

“This is a big industry in terms of value, but not relative to the supply chain,” he explains. “We are seeing a growing number of upstream mega-projects, but there is enough inherent risk in these hugely expensive projects without adding another level of risk in the supply chain. The higher upstream you progress, the more the sector wants to work with tried, tested and proven suppliers so it is my hope that we will see a growing number of South African industry partnerships which twin our local expertise with trusted global names.”

The invitation to establish regional

headquarters and distribution and service centres are key current propositions. To add to the country’s many other attractions, the South African government has recently introduced a new ‘headquarters tax regime’ to appeal to global players looking for a base in the region. Blyth believes that the strength of the local skill-set, allied to the opportunity to establish a regional service capability ideally positioned for some of the world’s most exciting discoveries in West and East Africa, will prove a powerful enticement.

For more information about the South African Oil and Gas Alliance visit: www.saoga.org.za

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Total Namibia

Oiling Namibia’s mining boom Total Namibia is shaping up to leverage its international experience and reputation to establish a foothold in the country’s booming mining sector

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Total Namibia

I

Total Namibia is the only major international oil company with a presence in Namibia

n March and April 2010, BP and Shell, who between them accounted for nearly half of Namibia’s fuel sales, announced that they would halt operations in the African country. Amid these developments, Seggie Kistasamy was appointed managing director of Total Namibia. He found himself in Windhoek as leader of the only major international oil company with a presence in a country which, while eclipsed in terms of economy and population by neighbouring South Africa, possessed amazing potential and ambitious plans.

Total commands a third of oil and gas production in Africa and is the continent’s top petroleum marketer. It has had an established presence in Namibia since 1977, when the country was known as South West Africa.

In November 2010, Total moved into a prestigious new building in Windhoek.

“Total House captures the ‘Total attitude’,” says an enthusiastic Kistasamy. “It perpetuates an environment that reflects boldness, cross functionality, mutual support and listening. The ultra-modern office building harnesses natural light and encapsulates the energy of our brand.”

A well established player in the retail fuel market, Total certainly stands to benefit from a somewhat less competitive environment. However the real opportunity lies in the expansion of industry, Kistasamy believes. “The one market in Namibia we haven’t really tapped into is the commercial sector. In particular, Total has major contracts throughout the world with mining companies, but in Namibia we are absent

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Total Namibia from that market.”

Forgeweld Group An early priority for The Forgeweld Group has been in business since 1961 Kistasamy was to reposition and is a leading manufacturer and supplier of carbon and the company’s internal stainless steel tanks to the petroleum, food & beverage, structures to address wine and pharmaceutical industries. The company operates this market and appoint out of South Africa and has factories and offices in a business development Johannesburg, Durban, Cape Town and Bloemfontein. It provides a range of competitively priced, quality products manager to cultivate that incorporating the most up-to-date technology available sector of the business. worldwide, backed up by excellent customer service from Mining is a rapidly growing its friendly and efficient team. Forgeweld is proud to be and pivotal sector of the associated with Total Namibia.

Namibian economy. Some of www.forgeweld.com the largest uranium mines in the world are being built there, including Areva’s $1 billion Trekkopje mine, due to start production in 2012.

Despite the setback to the nuclear industry brought about due to the recent Japanese earthquake, it is certain that demand for uranium will continue to grow. Namibia is currently the world’s fifth largest exporter.

In the mining industry, machinery and equipment utilised all require specialised lubricants, greases and oils—products that have been supplied by Total throughout Africa. “The process machinery, the extractors, the crushers, and the earth moving equipment all depend on

“The one market in Namibia we haven’t really tapped into is the commercial sector”

Total has had a presence in Namibia since 1977

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Total Namibia

The company subscribes to Total international safety standards

specialised lubricants for their efficient but the parent company is only a short functioning and dependability,” Kistasamy hop away in Johannesburg, with massive says. “We have tribologists who study the experience gained in the mines of South strategic requirements, the applications Africa. Moreover, special requests can be and equipment at a specific referred to Total’s technical mine. Then they look for the centre in France, the Centre matching products that will Scientifique et Technique Jean Féger (CSTJF). Total suit that equipment working Namibia also supports in those conditions to reduce Total Namibia is the the government’s skills operating cost and extend only ISO 14001-certified development programme, the life of that equipment.” petroleum company offering ongoing training Those specialised skills in Namibia to staff, contractors and are not available in Namibia

iso 14001

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emerging entrepreneurs. In addition, it currently sponsors bursaries and offers an in-house internship programme.

As it engages with the market, Total Namibia hopes to secure OEM contracts on the back of similar agreements already in place across Africa. Such a contract has already been secured with Toyota. “If a brand like Toyota has confidence in Total it demonstrates to the market that they are satisfied with our tailor-made service and the product,” says Kistasamy. “Total Namibia is the only ISO 14001-certified petroleum company in Namibia. In addition, we subscribe to Total international safety standards.”

Namibia, like South Africa, is doing its best to encourage small traders and entrepreneurs from previously disadvantaged groups to establish themselves. However, inexperience can present challenges for both small businesses and their customers alike. It is one thing to become a supplier of petroleum products, but another to understand the product and the value chain. Without the right skills and funding, the environment, safety and eventually the customer’s profits can suffer. It can be a problem for the oil company too, Kistasamy points out. “Once we become the supplier to an installation we

become fully accountable for its operations and the environment as well; but some new local companies place us in an intermediate position—they sign an agreement, we supply the product, but then they walk away from the liability.”

Total Namibia’s solution has been to engage with those companies, train people and expose them to Total’s standards and best practices. “We want to help emerging

“Over the next few years, we plan to ensure that all our facilities comply not just with internal requirements but the best European standards” 116 | BE Oil & Gas

Total Namibia

Total Namibia is well established player in the retail fuel market

companies even if they we provided the opportunity do not directly trade with to grow the operation, while we took on the Total. We help anyone who training and maintenance comes to us for assistance of the equipment.” Energy and wants to understand Solutions is trading under the market.”

Target for Namibia An opportunity to put this its own name and with the to be considered a policy into practice arose support of Total Namibia, developed economy in November 2010. A small will tap into niche markets, depot 200 kilometres north providing a customised of Windhoek was due to be closed when the service to small farms and businesses local market it had served dwindled. But a in the area. local businessman expressed an interest in Following the 2005 fire at the Buncefield keeping the facility open and running this depot in the UK, Total reviewed its entire fully fledged facility for storage, handling infrastructure. “Our engineers and external and distribution of petrol and lubricants. consultants set minimum prescribed “Giving access to smaller companies is equipment standards for all storage facilities something the government is keen to do, so over 1,000 cubic metres in capacity. We set

vision 2030

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Storage facilities are being refurbished

Total Namibia out a programme to refurbish our main transhipment and storage facility at Walvis Bay. This should be completed by the end of 2012.” The company is also refurbishing its other depots in Windhoek and Otavi, in the north of the country.

At present the Otavi facility is quite small, but in a growth area where a lack of storage facilities exists, he says. “We are upgrading it and bringing it up to Total Group safety and environmental standards.

The ‘Invariant’ equipment exceeds the minimum statutory requirement for Namibia but we don’t compromise on standards and quality. Over the next few years, we plan to ensure that all our facilities comply not just with internal requirements but the best European standards.”

Namibia has declared Vision 2030—the date by which it wants to be considered as a developed economy. To achieve that, its infrastructure—particularly its port at Walvis Bay and its railways—will require significant investment. As such, there is a great deal of work to be done by Total: Kistasamy says he relishes the opportunity to support skills and expertise in the oil industry and promote the Total brand in Namibia’s mines and manufacturing industries. Tourists will be mainly aware of the network of service stations and can expect to see a big change here too, as they are refurbished and their range of services expanded.

For more information about Total Namibia visit: www.total.co.za

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Reserves of one billion barrels have been identified

Tullow Oil Uganda

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ullow Oil is sitting on vast reserves of oil. Its biggest find to date—the Jubilee offshore field in Ghana—came on stream in 2010, just three years after the discovery was made. Other global sites saw an average of 58,100 boepd in 2010 from fields as far apart as the North Sea and Pakistan.

But it was a different story 25 years ago: the company didn’t have a single barrel of oil to its name. Nor, for that matter, did the experts ever think it would, while it was looking at the abandoned fields of Senegal. But Irishman Aiden Heavey, who founded the business, has proved them all wrong and created a lasting bond with Africa in the process.

“There’s no doubt that Aiden is an inspirational leader,” says general manager of Tullow Oil Uganda, Dr Brian Glover. “There was a time when Tullow found it difficult to attract good people; now, we have become something akin to a popular club that the best in the business want to join.”

Glover puts this attractiveness down to the Tullow way of working. “We support and encourage entrepreneurial spirit,” he says, “but always by working within strict ethical guidelines.”

Social responsibility isn’t something universally linked with the oil exploration business—especially when working with autocratic governments in developing countries. But it’s the way Glover says that Tullow works, and he has just spent the last year doing exactly that with the

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Tullow Oil Uganda company’s latest find and Engen possibly greatest challenge Engen is a multinational petroleum company with a 125,000 to date. barrels-per-day refinery. It is a key supplier of fuels and “The industry was lubes for mines and is the second largest oil marketing astounded that we were company by volume in Sub-Saharan Africa. Engen’s able to bring the deepwater downstream activities in Uganda involve marketing of Jubilee field in Ghana fuels, lubricants and other petroleum products. Engen has supplied Tullow Oil with fuels and lubricants for its on stream in just three exploration activities since 2007. years: an unprecedented www.engenoil.com achievement. Now we have to do something even more challenging—develop the Lake Albert deposits without damaging some of the world’s most ecologically sensitive lands.”

In case your African geography is rusty, Lake Albert is a 160 kilometre long inland sea separating the Democratic Republic of Congo from Uganda. It’s been known that there was oil in the region for years, thanks to the telltale seepage of oil. But just how much was never clear.

In 2004, Tullow acquired an interest by buying Energy Africa. It then went into high gear drilling 40 exploratory wells, with all but one encountering hydrocarbons. To date, reserves of one billion barrels have been identified and it is believed that a further 1.5 billion barrels of prospective resources remain.

Uganda has little infrastructure by way Over the intervening years Tullow has of roads and rail networks

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Tullow Oil Uganda

Working with local people to replant trees

acquired additional equity in that locality by purchasing Hardman Resources in 2007 and Heritage Oil and Gas in 2010, leaving it as the sole rights holder in a 160 kilometre by 60 kilometre area that has made 17 workable discoveries.

Developing the Lake Albert reserves, though, will be no easy task. Uganda is a landlocked country roughly the size of England but over 1,000 kilometres from the sea; and outside a handful of urban centres, it has precious little infrastructure of any kind, with no road or rail network to speak of (certainly Pearl Engineering Company Limited nothing robust enough to Pearl Engineering Company Limited was established transport the thousands of in 1994 in Uganda and renders services in the civil and tons of equipment needed to building, mechanical and electrical engineering fields. It extract oil). also provides technical service audits and procurement of project materials. Over the last 18 years we have provided “We estimate that construction services to many clients including Tullow the project will cost Uganda Operations Pty Ltd. The work with Tullow includes US$10billion,” says Glover, construction of access roads, oil drilling pads and other civil “and clearly, it is far too engineering associated works. We wish to join hands big for us to want to tackle with foreign companies in joint venture arrangements to it all alone.” Consequently, increase our participation in the oil sector.

Tullow has decided to invite info@pearl-engineering.com two heavyweight partners

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Tullow Oil Uganda to help develop Lake Albert.

Globe Trotters Ltd Agreement has been reached Globe Trotters Ltd (GTL) is 100 per cent owned by with Total and CNOOC, Ugandans and run by a team of youthful experts, dynamic China’s largest producer of and professional staff, primarily handling movement of offshore oil and gas. For a cargo in the East African region. GTL has been given an cash consideration of US$2.9 opportunity to offer transport services to Tullow’s Uganda billion, the two partners operations, which is largely as a result of the management of Tullow putting an emphasis on enhancing locally-owned will each receive one third Ugandan companies’ opportunities to grow with the newly of the project, with Tullow found oil in Uganda. We hope Dr Brain Glover attains retaining the final third.

Tullow’s expectations and continue the willingness to The precise details of support Ugandan owned companies and communities. how best the three partners www.globetrottersltd.co.ug will work together are currently being worked out but one thing is known for certain. Until now, Uganda has had to import every drop of oil it needed, so a priority component of the plan will be to build a small scale refinery—at least big enough to satisfy the country’s energy needs. Whereas once it was thought that only a small quantity of oil was involved, it is now known that there are much larger reserves, opening up another development option of having a pipeline to the Indian Ocean.

In the meantime, Tullow is taking its social responsibilities very seriously. “It is important to us,” says Glover, “that all Ugandans benefit from the finds that have been made. As well as providing direct Tullow employs 85 per cent local workers

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employment opportunities, we are trying to encourage local entrepreneurs to become suppliers to the project. By creating a multiplier effect, oil revenue can develop skills and a more profound economic base for the country.”

Tullow already employs 85 per cent local workers; but filling the vast numbers that

will eventually be needed isn’t going to be easy. The local population comprises fishermen who live much the same simple lifestyle as they have for centuries. The only difference is that overfishing has made a huge dent in fish stocks that is going to take some time to recover. But before fishermen can become roughnecks,

“By creating a multiplier effect, oil revenue can develop skills and a more profound economic base for the country”

Production of 200,000 barrels of oil per day is expected

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Tullow Oil Uganda

Tullow Oil supports local schools

they need a certain level of training, which Tullow is committed to providing.

In a similar scenario, outside the Murchison Falls National Park, parts of what ought to be equatorial forest are looking decidedly threadbare. “With no electricity or gas on hand,” says Glover, “wood accounts for the energy needs of 93 per cent of the population. We are working with local groups to replant trees—not just for bio-fuel, but as commercial crops.”

Health also has its challenges— particularly from cholera, a water-borne disease that calls for better provision of drinking water. The one bright spot is

the low incidence of HIV/Aids, thanks to the government recognising very early the potential danger of ignoring the problem.

With a wish list as long as Tullow’s, everyone from the government to the local population will be looking forward to the day when revenue starts flowing from the expected 200,000 barrels of oil per day the basin will produce.

For more information about Tullow Oil Uganda visit: www.tullowoil.com

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Plenty in the pipeline With offices in the UAE, India and Singapore, and an office and oil storage terminal planned for Asia-Pacific, Gulf Petrochem is showing no signs of resting on its laurels, as Jeff Daniel discovers

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Gulf Petrochem

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Gulf Petrochem

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ulf Petrochem today is a US$500 million business— and it has all been achieved in a little less than 10 years since founders Ashok Goel and Sudhir Goyel took the journey from India to the United Arab Emirates to see what kind of business they could create exporting petroleum-based oils and lubricants. The pair settled in Hamriyah Free Zone in Sharjah, along the coast from Dubai, and within a few short years Gulf Petrochem had commissioned a 200-tonne per day re-refinery.

The milestones have flown by quickly. From its first $1 million, turnover multiplied rapidly, and by 2007 it had broken the $100 million barrier. Since then, despite world recession, sales have continued to double every couple of years to their present level, with the company crossing $360 million in 2010.

There’s no doubt that founders Goel and Goyel did a marvellous job of getting the business off the ground; but perhaps the best decision ever made was to appoint a professional manager. Since 2007, executive director Harshavardhan Sinha has been at the helm. His appointment marked a major shift in management philosophy which put Gulf Petrochem onto a path of sustainable growth. Sinha is an MBA graduate from XLRI—one of India’s premier management teaching institutes— and he brought to Gulf Petrochem over 30 years of experience in senior management positions ranging across marketing, operations, project management, human resource management, corporate communications and general management.

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Gulf Petrochem “Until 2006, our growth Vijay Tanks & Vessels came only from internal Vijay Tanks & Vessels (VTV) has evolved as an international accruals,” Sinha states. company for the design and fabrication of various equipment “In 2007 we decided to for the oil & gas, petrochemical, fertilizer, power and steel strengthen our banking sectors. The process equipment vertical encompasses arrangements on the working pressure vessels, process columns, heat exchangers and capital side as well as via reactors, and includes benchmark assignments for some of the largest process equipment ever built. capital infusion for capital VTV is acknowledged as a major designer and constructor growth. After that, there’s of storage tanks globally and is among just a handful of been no looking back.” companies that traverse the atmospheric, pressurised Today, the business and cryogenic storage value chain. VTV is proud to be is struct ured into associated with M/s. Gulf Petrochem and is involved in the six distinct strategic design and construction of their forthcoming oil storage business units: refining, terminal at Pipavav, Gujarat, India. VTV wishes Gulf Petrochem all the best in their future endeavours. grease manufacturing, Vijay Tanks & Vessels: setting the global standard. oil storage terminals, www.vijaytanks.com oil trading, bunkering, and shipping & logistics.

When Gulf Petrochem first started out, a grease manufacturing facility was created to produce over 30 tonnes per day of top quality lithium base grease—a plant that was later doubled in size to 65 tonnes per day. As testimony to the quality of output, the company is the supplier of choice as contract manufacturer to multinationals such as Caltex, Castrol, Gulf Oil, BP, Shell, Sharlu and Elco’s Nationalube. “Good relationships

“we strengthened our capital growth In 2007. After that, there’s been no looking back”

The company is the supplier of choice to multinationals

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with satisfied customers have led to, and will continue to lead to, the augmentation of our customer base,� says Sinha.

To provide added self sufficiency and independence, Gulf Petrochem then built its own oil storage terminal with a capacity of 35,000 cubic metres. This, along with chartered vessels, created the capacity to move bulk material inwards and cater to the bulk demands of customers.

Today, the original Hamriyah re-refinery has a sister plant. In mid-2008, a highly automated 250 tonne per day refinery was built with distillation columns capable of handing a large spectrum of petroleumbased feedstock. The flexibility offered by this plant has given Gulf Petrochem the opportunity to enter new market segments such as solvents, naphtha, light fuel oil, gas oil, diesel, hexane, benzene and toluene.

The company has recently even established itself in the bitumen market.

The addition of the dedicated oil terminal not only supported manufacturing through vessel loads of feedstock but it also added a new dimension to the competitiveness of the business by supporting trading in the same way. By blending the products it had or could source, Gulf Petrochem was able to offer customer-specific grades as well as

the facilities to store and deliver them as required. At a stroke, it had reduced its own internal bottlenecks and opened a lucrative line of business in the process.

The facility has a total of 14 tanks of varying capacities adding to a total of 35,000 cubic metres. Combine this with the inbuilt capacity at Refinery II and the total oil terminal capacity in Hamriyah reaches 75,000 cubic metres. There are

“Broadly speaking, our growth in the future will be two-pronged: growing our trading and bunkering globally, and adding oil infrastructure�

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Gulf Petrochem

Gulf Petrochem offers customer-specific grades

separate pipelines to the over $130 million. Completion berth for white and black of this stage is scheduled for products (the industry’s way the second quarter of 2012 of differentiating between while the master plan for the products of different values development envisages a far in comparison to crude greater ultimate capacity of oil) and a separate line for 1.2 million cubic metres. The Turnover in 2010 bitumen. As well as marine consultants for the project are transportations, the facility UK-based Mott MacDonald. is equipped with a weigh Strategically, Fujairah’s bridge to enable inward and outward importance cannot be underestimated. The movement of goods by road tanker. only major UAE port outside the Arabian Gulf, Gulf Petrochem is now in the process of it is also the second largest bunkering port in expanding its oil terminals both in the UAE the world after Singapore, rubbing shoulders and outside. An oil terminal with a phase I with Houston and Rotterdam. Abu Dhabi capacity of 412,000 cubic metres is currently has made a recent tranche of investments under construction at Fujairah on the other in Fujairah that are designed to fuel further side of the UAE peninsula, at an investment of growth; and if these are anything to go by,

ÂŁ360 million

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the area’s strategic significance is likely only to increase. The investments include a 400 kilometre crude pipeline from Abu Dhabi to Fujairah; a 400 kilometre gas pipeline; and grain silos at the port. A refinery is also to be positioned in close proximity to Gulf Petrochem’s oil terminal.

Another very significant string to Gulf Petrochem’s bow is the business of oil trading. The company presently trades in

petroleum products—i.e. fuel oil, gas oil, base oil and bitumen. A team of experienced traders is presently based across the UAE, India and Singapore, bringing with them over 100 years of trading experience with major global oil traders. “Our people are our fundamental strength,” says Sinha. “Satisfied employees give satisfactory results; charged employees give superlative results.”

A relatively new line of business for the

“With all this—Hamriyah, Fujairah, India, Asia-Pacific and North Africa— we are confident of crossing US$1 billion in top-line by 2014”

People are the company’s fundamental strength

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Gulf Petrochem

The spearhead of growth will be trading and oil infrastructure

company is bunkering (ship refuelling), with operations now underway on the western coast of India and in the UAE. Gulf Petrochem’s strategy is to create a global bunkering network to serve customers around the globe.

Shipping and logistics, meanwhile, is essentially a support division; but the company has acquired two vessels and there is talk of expanding this in the near future.

There are also plans in the pipeline to add barges, to support bunkering activity.

“Broadly speaking, our growth in the future will be two-pronged: growing our trading and bunkering globally, and adding oil infrastructure—oil storage terminals, vessels and barges,” Sinha states. “This does not mean that the other strategic business

units will not see growth and investment.

But the spearhead of our growth will be trading and oil infrastructure.”

Sinha’s experience in product development and marketing in petrochemicals has already proved invaluable to Gulf Petrochem, as is evidenced both by the company’s growth in the years following his appointment; and in the grandeur of its plans for the future.

“With all this—Hamriyah, Fujairah, India, Asia-Pacific and North Africa—we are confident of crossing US$1 billion in top-line by 2014,” Sinha concludes.

For more information about Gulf Petrochem visit: www.gulfpetrochem.com

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Subsea construction and engineering company Technip Norway provides essential infrastructure services to customers working in some of the world’s most challenging environments

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Technip Norway

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Technip Norway designs, fabricates, installs and services systems for subsea oil and gas fields

Technip Norway

T

he Technip Group is a French Russia. Induction training begins with health, eng i ne er i ng compa ny, safety and environment (HSE), followed headquartered in Paris, employing by technical initiation. The intention is to more than 23,000 people across embed its core cultures and values within the world. Its main office in the company from top to bottom, such that Norway is in Sandvika, a few kilometres Technip can become the reference company west of Oslo, with additional facilities in in safety performance.

Orkanger, Haugesund and Stavanger. As the Everyone has to meet Technip’s safety and leading subsea engineering contractor on quality (QHSE) standards. The company has the Norwegian continental shelf, Technip an apprenticeship scheme and a graduate Norway designs, fabricates, installs and recruitment and training programme, which services systems for subsea oil and gas fields. enables it to ensure a mix of younger and Globally, Technip is involved in most more experienced people. The 18 to 24 month segments of the oil and gas business, initial training process enables Technip apart from down-hole to see how quickly its new and production, including employees understand subsea, large onshore the business and become facilities and offshore valuable contributors. platforms. Its primary area Te c h n ip Nor w a y operates as a main of work is the Norwegian Floating production, contractor to oil and gas continental shelf but it also storage and offloading works on subsea projects companies and is currently vessel engaged as an engineering, offshore north-west Russia, in the Barents Sea and on procurement, installation and construction (EPIC) contractor on some ad-hoc international projects.

It’s a very competitive arena and several significant field developments in competition has led to a raft of significant the Norwegian North Sea sector. advances in marine energy technology over The company has had a frame contract the past 40 years. It remains a technology- with Statoil since January 2007 for diving, rich environment and if you’re not at the pipeline repair, contingency and modification forefront of development, you’re nowhere. services. This was extended in January 2012 Technip believes that its major differentials for three years to the end of December 2014. include its competent people, its technologies, The yearly revenue under the contract is product focus and project execution model. expected to be in the range of €50-80 million.

The company’s employees in Norway This contract is an exclusive agreement represent many nationalities from across for all diving and diver assisted operations the world—as far afield as Australia and the offshore for Statoil. It covers management Americas, as well as European countries and and execution of subsea marine operations

FPSO

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Fugro’s expert staff and state-of-the-art equipment, coupled with local knowledge from over 275 offices in more than 50 countries, provide the know-how to deliver high quality results while meeting deadlines. From initial planning to project completion, our excellent track record is proof that you can count on Fugro to get the job done.

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Technip Norway within inspection, maintenance and repair and diving, such as planned maintenance, modifications and installation work, and contingency for pipeline and subsea equipment repair. The operations are diver assisted or remotely operated.

Another Statoil contract, awarded in February 2011, is due for completion this year. Worth approximately ₏90 million, this is for the Gygrid field development in the Norwegian Sea at a water depth of 265-330 metres. This contract covers engineering, procurement, welding and installation of flowlines, including a 19.5 kilometre pipe-inpipe production flowline, a plastic-lined water injection flowline and a gas lift flowline of the same length, subsea equipment installation, and installation and tie-ins of new risers and umbilicals. Flowline welding was handled at the Group’s spoolbase in Orkanger, Norway, while installation will be performed by the Apache II, a pipelay vessel from the Technip fleet, in mid-2012.

Technip has also been working hard on subsea harsh environment projects over the past decade, from Terra Nova and White Rose on the Grand Banks of Newfoundland to Snohvit in Northern Norway, which provide valuable experience that can applied to the development of projects for oil and gas

19.5km Pipe-in-pipe production flowline for Statoil

Technip Norway operates as a main contractor to oil and gas companies

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development in the Arctic region.

The company considers these projects to be stepping stones towards oil and gas development in the Arctic region. “The lessons learned from operations in harsh environments in relatively remote locations can be used to better prepare for any future operations undertaken in the Arctic,” said Sam Allen, president of Technip Canada.

It is not necessarily the individual challenges offered by the various environmental elements that make working in such areas so demanding, but the combination of wave, current, wind, fog, ice, soils and short season make the sub-Arctic and Arctic a very unique area of the world to undertake offshore operations.

Environmental data for frontier regions is generally lacking when compared to the mature oil and gas regions. When the industry talks of exploration and production in the Arctic, the impression often given is that the Arctic is one homogenous region. In fact, Technip has divided the Arctic into six regions, each with its own set of challenges.

The Terra Nova project, conducted from 1997 through 2001, was the first-subArctic subsea mega project, the first to use large scale open glory hole construction for iceberg protection and the first to deploy

a disconnectable riser system in a harsh environment. Terra Nova was also the first full field subsea development on the Grand Banks and the first floating production, storage and offloading vessel (FPSO) to be deployed in North America.

As the industry pushes further north, new technical challenges will continue to present themselves, not least the logistical issues around transporting construction to the project location.

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Technip Norway

Yme manifold installation

Technip encountered the challenge of distances between manufacturing locations and the project worksite on the Snohvit project, where Technip’s work scope included the installation of more than 450 kilometres of product using one of Technip’s reel-lay vessels, the Apache. The distance between Technip’s Norwegian spoolbase in Orkanger and the project worksite made multiple interim trips of the Apache to the spool base impractical. The solution was the development of a pipe transportation system allowing delivery of large volumes of rigid and flexible pipe to remote regions.

With increased water depth, a significant amount of future field developments will be made through the use of subsea completions and longer tiebacks. Due to the environmental sensitivity of the area, there will be zero

tolerance for spills and system and execution integrity will be critical.

Construction vessels will require larger decks, bigger cranes and faster transit speeds, and will need to be capable of operating in temperatures below -20 degrees Celsius for extended periods of time.

“There will be new, yet unforeseen, system design and construction challenges and offshore planning will become increasingly sophisticated. Development of the region will not be for the faint hearted and only the very top contractors will be able to respond to the challenges,” said Allen.

For more information about Technip Norway visit: www.technip.com

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Engen Petroleum

Wayne Hartmann gives Andrew Pelis an insight into the strategy behind an ambitious international expansion programme

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Exuberant Engen team in Rwanda. With us you are Number One

Engen Petroleum

A

s South African businesses thrive in the post-Apartheid era, many companies are looking at opportunities to develop the entire sub-Sahara region. There is no guarantee of success, however, and the ability to adapt to local dynamics and customer preferences is a major challenge.

For Engen Petroleum, the challenge of expansion involves international red tape, differing customer expectations, variable transportation networks and often limited IT infrastructure. Despite these considerations, Wayne Hartmann, general manager for International Business Division, has overseen a period of continued growth, as the oil company gathers momentum towards fulfilling its EPIC 2016 Vision.

“We are a petroleum products marketing company (downstream) operating in subSaharan Africa, with our headquarters in Cape Town, South Africa,” he explains. “We operate a refinery in Durban from where we make approximately 40 different products, ranging from LPG through to HFO, which we market across Southern Africa.

“We are not involved in oil production; we purchase crude oil from other areas of Africa and the Middle East, which we refine and then market and distribute. The Durban site produces 125,000 barrels per day and employs about 1 500 people (700 of which are contractors). Engen as a group employs in the region of 4,500 staff.”

Today Hartmann oversees the company’s extensive network of service stations across 20 countries in sub-Saharan Africa

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Engen Petroleum

Engen retail outlet in central Africa

and exports to many other is where the name ‘EPIC territories, mostly in Africa 2016’ comes from. We have and the Indian Ocean tripled our income to date and we are on course to Islands. “We are very much guided by market and meet our target.”

Ten year vision for growth The company has been in customer expectations and business for over a hundred feel that our awareness of the cultural differences in years and was formerly each country has given us a commercial owned by Mobil, until it pulled its business advantage—different markets have different interests out of South Africa at the height needs and our approach reflects that. of the Apartheid era. Engen was then taken “Since 2006 our target has been to over by local mining house Gencor and was aggressively grow the business outside subsequently renamed Engen and listed on of South Africa by eight to ten times and the Johannesburg Stock Exchange. we aim to accomplish this by 2016, which “In 1996 Petronas bought 30 percent

epic 2016

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Engen Petroleum of Engen and took 100 ERM percent ownership in 1999.

ERM salutes Engen’s success in Africa. Engen has A subsequent de-listing demonstrated leadership in environmental and social of the company occurred performance in the countries where it operates. This concurrent with the sale includes programmes to protect the environment; enhance of 20 percent to a local the communities in which it operates; and ensure the safety empowerment company of its employees. We are proud to support Engen’s efforts to operate responsibly and sustainably. called Worldwide Africa www.erm.co.za Investment Holdings,” Hartmann explains. “For many of our non-SA businesses we have local shareholders who better understand what is happening in regards to local policy and also what local customer preferences are. This makes a huge difference and the end result is a richer outcome—I expect we will see more of this approach in the future,” he adds.

Engen has two major distribution channels, the first being its retail arm, which concentrates on service stations, offering a variety of services depending on the requirements in-country. “Since we decided to expand across the sub-Sahara region we have built 20 to 30 stations each year. They represent our brand through an initiative to train staff and franchise owners.” The strategy continues to work and the recent acquisition of seven businesses from Chevron adds to a list of previous Citiboke School construction in Burundi

“Since we decided to expand across the sub-Sahara region we have built 20 to 30 stations each year” BE Oil & Gas | 157

Engen Petroleum purchases from multinational companies where we have to source products from, including Shell and Total. meaning we can’t always use our Durban The second distribution channel is the production. We have invested over £14 business to business sector, where Engen has million over the past three years on forged strong relationships with a number supply chain infrastructure and recently of industries including airlines, mining and opened a new depot in Zambia, which will transport companies. significantly increase our International trade puts capacity to support growth. extra strain on supply chain “Another challenge is ensuring that we have management, which is one of enough skilled people for Hartmann’s main challenges now. “This is definitely a an organisation that wants Number of products work in progress for us and to grow rapidly. We run manufactured in we often encounter national in-house training schemes to Durban refinery regulations that determine develop staff with technical

40

Cibitoke School during construction and after, basking in the Burundi sunlight

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inspired Your weekly digest of business news and views

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Engen Petroleum

Before and after: Engen retail construction projects transform the neighbourhood in Democratic Republic of Congo

skills and we have a targeted personal development programme, which runs alongside a graduate recruitment initiative.�

One of the key areas Engen is looking to improve on is its carbon footprint. Hartmann says this is far from straightforward, in an area where other companies can gain an advantage by operating in a less committed fashion. “We have to strike a balance and we are currently rolling out an

aggressive growth programme that invests in technology and environmental measures that will stand us in good stead for the future. We are trying to reduce the amount of cooling that takes place at each station by using solar and wind power and different building materials. “We are trying to understand the latest best practices and better manage our use of power in areas such as lighting. All of

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Engen Petroleum

this costs money of course and not every competitor considers their environmental impact in this manner, which keeps their costs down and is sometimes used against us competitively.”

Hartmann has been with Engen for over 25 years and was formerly in charge of the Durban refinery. He is positive about what happens next. “The next twelve months will see the transition period for the Chevron businesses we have acquired. We must integrate these sites into our existing operation and ensure the people are motivated to succeed. We will look to make more acquisitions in the future and Kenya, Uganda and Ghana are areas to focus on.

“Change must be managed well; we must understand where the customers are and what their needs are—that is where our continued growth will stem from,” he concludes.

Zambian investment in modern, new country office in Lusaka

For more information about Engen Petroleum visit: www.engen.co.za

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Jindal Drilling & Industries Limited

Partner of choice

Raghav Jindal, managing director of Jindal Drilling & Industries Limited, explains to Jayne Alverca why the company should be a preferred partner for international oil and gas corporations wishing to create a footprint in the Indian market

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JDIL is uniquely positioned as a premium oil and gas drilling contractor

Jindal Drilling & Industries Limited

J

indal Drilling & Industries Limited (JDIL) was incorporated in 1983 with its prime focus on providing innovative and advanced technical solutions to the offshore drilling requirements of India’s oil and gas industry.

“With modest beginnings but a mission to prosper with a strong emphasis on safety and quality driven by dexterity, integrity, professionalism, relentless commitment and operational excellence, JDIL is today uniquely positioned as a premium oil and gas drilling contractor, providing a wide spectrum of the highest quality services in the oil and gas sector,” explains managing director Raghav Jindal.

From the outset, JDIL has benefited from the experience and technical expertise associated with being part of the D. P. Jindal Group, one of India’s most well-established and respected industrial organisations with revenues exceeding US$750 million and a workforce of more than 3,000. The group has a strong presence in India, manufacturing seamless (up to 14 inches) ERW and API 5L grade line pipes, and also deals in wind power generation, offshore drilling, directional and horizontal drilling, and mud logging services in the oil and gas industry.

JDIL is a key contractor for the Oil & Natural Gas Corporation Ltd, the Indian government’s state managed enterprise, and also works closely with the US-based Nobel Corporation.

Jindal explains that JDIL came to life as an intermediary to fill a gap in the marketplace and has since steadily progressed up the

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Jindal Drilling & Industries Limited

JDIL operates five jack-up rigs

value chain. “We pioneered promoting Indian alliance/partner with the capability the concept of chartering offshore rigs of managing risks and shouldering in the Indian offshore drilling industry, responsibilities and liabilities, and that is whereby rigs were hired from international where we found our niche,â€? he explains. companies and were then contracted to Accredited to ISO 9001:2008 standard, Indian E&P companies for their drilling JDIL currently operates five jack-up rigs, plans. Understandably by this process, which are all deployed in the shallow waters the E&P companies enjoyed the leverage offshore Mumbai and have the capacity to of getting the latest technologies and drill to depths of up to 30,000 feet. These specialised services and drilling operations are improving their chances the key focus of current of success. Moreover, the operations; and the drilling international companies division has a turnover in who wished to work in the region of ÂŁ170 million, India but could not do which accounts for almost so primarily due to the half of overall revenues regulatory environment, within the group.

Drill depth capacity benefited from having an In 2010 JDIL achieved

30,000 feet

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Jindal Drilling & Industries Limited the distinction of being can rapidly build up when one of a select group of a drilling operation has to be suspended. Our quality companies that made it onto Asia’s Best Under A Billion management is second to none and the levels of list, compiled by Forbes JDIL appeared on Asia’s magazine. Jindal believes efficiency we achieve mean Best Under A Billion list that the company has won that we waste absolutely its leadership position none of our clients’ by distinguishing itself resources.” from other service providers on the basis JDIL is committed to the achievement of superior service quality, operational of a safe, healthy, injury-free and performance, equipment suitability and environmentally sound business for all availability, reputation, reliability and persons and operations under its control, technical expertise. and to continuously improving the quality “We are now positioned as a world class of work. JDIL’s excellence in providing drilling contractor,” he states. “Our rigs quality services with high safety standards have achieved a record for either zero has resulted in it winning the safety award or near zero downtime and this is a very for ‘Without any lost time accidents’ from important performance indicator in the the International Association of Drilling industry because of the heavy losses that Contractors, Houston, on many occasions.

2010

JDIL has won awards for safety

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“Our staff are extremely well trained to respond to any situation or emergency,” Jindal continues. “Equipment and staff requirements are processed immediately and we maintain excellent communications with our customers and partners. Staff training is a very important element of our success and each of our rigs has an additional personnel component which is there to watch, learn and be trained for future operations.

We give deserving and excellent employees the opportunity to achieve the necessary level of skill and expertise and to progress vertically to superior and responsible positions within the company.”

Three years ago, a strategic shift to add value to the business by adding two new generation, state-of-the-art, premium jack-up rigs—Discovery I and Virtue I— led to the creation of a joint venture, with JDIL having a partial ownership stake.

“The management is our responsibility and brings a new challenge, but obviously we also have the chance to derive a higher margin than when we are working on a purely contractual basis,” he adds.

He is keen to add more jack-up rigs, and is also keen to extend the company’s reach into more sophisticated drilling equipment and operations, tackling reserves located in

deeper waters by adding semi-submersible rigs and drill ships. “We are among the top-end highly acclaimed service providers in India in this market, and now is the time to build on our achievements and reputation,” he declares.

Although the domestic market will remain the primary focus of operations (as there are huge opportunities to be tapped in various disciplines within India’s oil and gas

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Jindal Drilling & Industries Limited

India has an insatiable appetite for oil and gas

market), JDIL is also studying opportunities in the Middle East and the Far East.

“In the near future with India’s insatiable appetite to explore oil and gas natural resources to fuel its domestic growth, I believe demand for offshore and onshore drilling rigs and drilling services, technology and other oilfield services will grow substantially; and we are actively seeking out more partnerships with companies abroad who want to enter the Indian market. We have been in the drilling industries for more than two decades and are well versed with the operational, legal and contractual requirements for carrying out such operations. We would be a powerful ally to international companies wanting to work in India and be able to extend comfort

to them by providing our expertise, skills and experience for drawing technical, managerial and marketing intelligence inputs and operational back-up support.

Our financial stability, professionalism and capability to shoulder responsibilities and manage risk will certainly be beneficial for building cordial business relationships.

“We also look forward to working overseas and we do not see ourselves as in any way limited by national borders. We will go to wherever there is a demand for our knowledge, expertise and capability,” he concludes.

For more information about Jindal Drilling & Industries Limited visit: www.jindaldrilling.com

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Dolphin Offshore Enterprises

Dolphin Offshore Enterprises has a reputation for efficiency and innovation. Joint managing director Navpreet Singh talks to Gay Sutton about his strategy for expansion and development

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The company offers underwater engineering, procurement, fabrication and construction for oil rigs, platforms and pipelines

Dolphin Offshore Enterprises

L

ike most innovative and dynamic industry although we have done underwater companies, Dolphin Offshore work for the nuclear power industry and Enterprises evolved from a chance a fair amount of floating ship repair and business encounter aligned with salvage work,” explains joint managing the emergence of a new and director Navpreet Singh. “Until recently the expanding market sector. As joint owner bulk of our work has been on the Mumbai of a ship repair company, retired naval High oil field about 100 kilometres offshore, Admiral Kirpal Singh gained his first insight but over the last few years we have expanded into the capabilities of the diving industry our horizons and worked further afield with while working on a salvage contract, and contracts in China, Vietnam and Malaysia.”

The company provides a comprehensive was quickly able to see the opportunities for the sector in the newly discovered Mumbai range of services, delivering anything from High oil field some 100 kilometres offshore. a single service through to complete turnkey Singh sold his shares in the ship and underwater engineering, procurement, repair company and fabrication and construction formed Dolphin Offshore projects on oil rigs, Enterprises in 1979. platforms and pipelines.

Then, by linking up with The underwater capabilities Taylor Diving & Salvage include air, mixed gas Company, a subsidiary of and saturation diving and Number of people the Halliburton Group, underwater engineering employed in offshore he acquired the necessary services rolled together as activities expertise and experience the Operations division.

Topside construction and and began to provide diving services to state-owned ONGC (Oil and engineering work, including fabrication, Natural Gas Corporation). pipe work and hook-up commissioning, is The business relationship worked very managed through the Projects division. well and today, Dolphin is a large national These are supported by in-house marine institution with a reputation for innovation management and marine logistics support and efficiency, having pioneered many new services, which have been hived off diving and marine techniques in India and into a wholly owned subsidiary, Dolphin established a name for developing creative Offshore Shipping. and effective solutions to challenging Behind Dolphin’s success lies an interesting strategy for project management. “With most marine problems.

The company currently employs some offshore operations there are generally three 250 people at its offices in Mumbai and up to agencies pulling in different directions: the 2,000 people in its offshore activities. “Our marine vessel’s master, the diving team and focus is still very much on the oil and gas the topside team. Each one perceives the

2,000

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Dolphin Offshore Enterprises

Fabrication, pipe work and hook-up commissioning are managed through the Projects division

project from their perspective which creates conflict and inefficiency. We’ve overcome this by managing all aspects of a project as a single operation,” Singh says.

“On each project, we nominate one division to take the project manager role, supported by a management team comprising people from all three disciplines,” he explains.

“Each element of work is therefore aligned with the client’s best interests rather than the individual’s own.” The resulting project is run efficiently, even down to appointing individuals to handle elements of work for all disciplines.

Innovation is another hallmark of the company. “We have pioneered many new diving concepts in India, and find creative solutions for our clients which are efficient

and effective,” Singh says. “The real challenge is finding the right solution, and this is down to the expertise, experience and knowledge of our people. Once we’ve done that, everything falls into place and it’s pretty simple.”

In 1990 Dolphin successfully repaired a damaged spudcan (rig foundation) in-situ for ONGC, and achieved the repair at a fraction of the cost proposed elsewhere.

The solution that Dolphin’s engineers came up with was based on their knowledge of construction under hyperbaric conditions, and involved isolating the damaged section on the seabed by building and installing a coffer dam and then carrying out the repair inside the coffer dam.

Last year Dolphin’s engineers developed

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an innovative new product to help it achieve another first for India—the first pipeline retrieval for ONGC on the Mumbai High Field. Not only was the pipeline removed, but also the associated support grout bags.

“For this we designed and developed our own grabber using a mixture of hydraulic systems. This was highly effective at removing the grout bags and enabled us to complete the job quickly and efficiently.”

It’s easy to see why good people are essential to Dolphin. The company policy is to employ only experienced and fully qualified staff, the majority of whom have been trained in Australia or the UK. “But we don’t treat people as commodities. We believe if we look after our people they will come back to work with us again,” Singh says. And this is very important as staff move around frequently within the industry, picking up knowledge and experience as they go.

Looking to the future, Dolphin has plans for expansion and diversification.

“We have a three pronged strategy, going forward,” Singh explains. “Firstly we’re looking to expand market share in our current marketplace by establishing a larger footprint in greenfield construction, pipe laying and platform installation fabrication, and by increasing our share of ONGC’s

budget from the current five per cent to around 25 to 30 per cent. Secondly there is a fair amount of deepwater work underway off the east coast of India currently done by foreign companies, and we would like to become the first Indian company to become involved in that. Thirdly, we intend to expand geographically into the Middle East and near Far East.”

Closer to home, the company is already

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Dolphin Offshore Enterprises

Dolphin has a three-pronged expansion strategy

well advanced with two major new investments that form the foundation for this growth. The construction of a waterfront fabrication and ship repair yard to complement the already established array of fabrication yards, workshops and storage facilities at Navi Mumbai will enable the company to undertake much larger projects and manage them effectively. Land is currently being sought in Gujarat with the aim of having the shipyard up and running within three years.

The second project has a visionary element to it and begins with the construction of India’s first diver training school. Final negotiations are underway to acquire land alongside Koyna dam in the state of Maharashtra, and talks are in progress with several

international diver training organisations to help develop an internationally recognised training institute.

“Initially the Institute is aimed at the diving industry,” Singh says. But his vision is much more ambitious. “I would like to see the school expanded into an Institute of Technology for the oil and gas industry.

Already we are seeing Indians working all over the world in the industry. I believe that by developing this area of expertise, we can do for oil and gas what India has already done for the infotech industry.”

For more information about Dolphin Offshore Enterprises visit: www.dolphinoffshore.com

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