"We were awarded a project with ENI at Ambriz requiring specialized fabrication of a quad joint pipe, and due to the lockdown it was not possible to bring in many expatriates. With minimum supervision from a couple of European specialists our Angolan workers have already completed half the work very successfully.”

Frédéric Heintz

DEPUTY GENERAL MANAGER, PETROMAR

September 03, 2020

How has the COVID-19 pandemic impacted Petromar’s operations?

Petromar, like the other oil and gas service companies in Angola, has suffered with the pandemic since March. The virus also came on the back of a number of years of economic crisis in the country, partly due to a challenging oil market post-2014. I joined Petromar in July 2019, with the aim to pursue its restructuring and position it for growth at a time when operators in Angola were looking to invest. Things were looking promising until February, and we were in advanced discussions with our clients regarding new projects for 2020. However, COVID-19 caused operators to reduce maintenance activities and postpone major investments. Extra health and safety measures, such as quarantine periods for workers and massive COVID-19 testing, have also increased costs. This caused Petromar to demobilize more than 70% of his staff in Cabinda, 40% in Soyo, and we are currently working on a demobilization plan for Ambriz.

Which of Petromar’s two main business lines – maintenance of oil and gas facilities and construction – have been in higher demand in the last twelve months?

Of Petromar’s main two business lines, the most active one in recent years has been maintenance – servicing clients operating plants or platforms. This includes one project in Cabinda with CABGOC to provide fabrication maintenance, one project in Soyo with Angola LNG to provide plant maintenance services, and one project with Sonangol at Block 3 on one of the platforms, where we perform mechanical and E&I maintenance. From March, each client reacted quickly and reduced their workforce needs. Also, in some cases, clients were requesting Angolan workers as many expatriates had to leave the country or could not come back easily.

Our construction business line, which involves the fabrication of subsea structures needed for offshore developments at Petromar’s yard in Ambriz, has fortunately continued, but at a lower volume of work due to some projects being delayed. However, all of the new projects have been suspended until 2021.

Petromar has also diversified in the last year, adapting our Ambriz yard into a commercial port. We are not competing with the Sonils or Soyo ports, but we are giving the possibility to other players to maintain vessels, to use sections of our workshops, to benefit of our expanding storage area and to organize their crew change using our accommodation Base in Ambriz.

Have you seen optimism return to the market since operations started ramping back up in August?

For the maintenance activities, our clients have immediate needs, so the outlook for increasing Petromar’s workforce in Q4 2020 is hopeful. Regarding the development projects, there is still uncertainty, and clients will not want to risk heavy capex investments if there is potential for further lockdowns or a second wave. Therefore, I think mid-2021 is more likely for this side of the business to resume. But the needs in Angola are still significant for the next years.

Has the Angolan government offered tangible assistance to oil and gas service providers?

Petromar has been in discussion with other contractors through AECIPA (Angolan Association of Oil and Gas Sector Service Providers) regarding government support for service providers. So far there has been some support for operators, managing the logistics of expats, for example. However, financially speaking we have not seen the postponement of taxes or any possible temporary adjustment in their application.

What experience does Petromar have with gas projects in Angola?

We have a wide range of skilled personnel who have worked on gas projects across our yards, including experience at the Soyo plant for Angola LNG. Kwanda Lda, Petromar’s sister company, is responsible for the management of the Kwanda Logistics Base at Soyo, so we are well connected to this environment. For the expansion of the production capabilities at the LNG plant we are able to offer mechanical and piping works and to partner with civil works contractors to assist in logistics and workforce management.

Do you think the lockdown showed the importance of a robust local value chain?

I believe so, yes, and having a strong local workforce is one of Petromar’s strengths. We employ some expatriates, but not as many as some of the service companies doing FPSO maintenance. We were awarded a project with ENI at Ambriz towards the end of 2019, part of the scope of which is the fabrication of a quad joint pipe that required some highly specialized man-power from abroad. Due to the lockdown it was not possible to bring in many expatriates, so we agreed to do most of the work manually with Petromar’s Angola welders and workers. With minimum supervision from a couple of European specialists our Angolan workers have already completed half the work very successfully.

What would you like to achieve with Petromar in the next 12 months?

For the fabrication and off-shore development business line the target is to retain the skilled workforce Petromar has trained over many years and maintain our assets during that period so as to be able to offer the strongest possible service when construction hopefully returns in H2 2021. Regarding the maintenance activities, we want to ramp up our workforce later this year in accordance with the needs of Petromar’s long term clients. We also plan to complete the expansion of our Ambriz yard by another 78.000m² in 2021, mainly for storage purposes, but also to further opportunities regarding the use of Ambriz as a port.

Petromar has always shown the capacity to adapt to the market and we believe the combination of this ability, our skilled local content and the company’s physical assets in Cabinda, Luanda and Ambriz put us in the position to survive challenging times and grow when conditions improve.

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