A long-term vision Clarksons’ presence in the West African oil & gas industry
Simon Pethick, Division Director for Clarksons Platou (Offshore) talks about the company’s involvement in the West African offshore industry. As well as pointing to the developing long-term local solutions, he also highlights the importance of sustainable financing in the region.
African oil & gas market?
Our services are quite diverse, but in our vessel brokerage role for offshore exploration and production we handle workboats – everything from 10 tonne to 60 tonne bollard pull – Shoalbusters, barges, large high power AHTS vessels with up to 200 tonne bollard pull, PSVs, IRM vessels up to 200 metres long, and high speed crew supply and security patrol vessels.
The Gulf of Guinea – Nigeria and Angola in particular – is the most established area, with Equatorial Guinea, Ghana, Namibia, Mauritania and Mozambique seen as emerging markets. South Africa is also an important producer.
What are the key aspects to consider when working in this part of the world?
Our focus is on the development of local content – we believe this is where the future lies. We want to assist indigenous companies build long-term sustainable solutions because, for far too long, the amount of the knowledge and assets retained in a country has been minimal. This is something that we are doing with our work with companies like L.A.T.C Marine, EA TEMILE, C&I Leasing and Marine Platforms Limited to name a few. It is our aim to assist them to develop their skills and assets in order to fulfil contracts in their country. This issue of local content is more established in the existing markets of Angola, Nigeria and South Africa – they have been the drivers of this philosophy.
What are the major challenges?
If you are talking about vessels, then the age of tonnage in West Africa is a challenge. For example, we have seen some of the international operators offloading older industry non-compliant tonnage that is no longer relevant to the market. For a long-term strategy, it is better to invest in new modern tonnage. This is why we support a shipyard like Damen – because they offer multiple solutions to our clients.
And then, in terms of production, because oil is driven by supply and demand, the recent downturn has been matched by a drive to reduce. However, what is certain is that at current oil production levels we do not have enough reserves under production to meet demands beyond 2025. But for the bigger exploration initiatives to become financially viable, the price per barrel must pass a certain threshold. Alternatively, if we don’t invest in exploration now and wait until 2025, it will be too late and we risk driving the cost of oil even higher than we are seeing today. Therefore, the time to invest is now.
Taking this into account, is this an optimistic market?
Yes it is. We have seen more exploration initiatives starting up, and there are some big projects coming up too. Bonga South West has the thumbs up, and the Zabazaba field is targeting production in 2021. And then, of course, the east coast is also important – some of the richest gas fields in Africa are to be found off the coast of Mozambique. In the drive for cleaner burning fuels, you cannot get better than natural gas. And this is a global supply that we are talking about, not only Europe.
Can you tell us more about Clarksons’ relationship with Damen?
For the segment in which I operate – oil & gas – Damen has something suitable for most of our clients’ needs. This could be anything from a small ASD tug to a PSV or Security Vessel. Damen is more than just a ship builder though. They have created an after sales business unit that enables clients to tap into their supply chain for parts, services and training. This filters through to our clients in all the key areas in which we operate.
A crucial fact in the African market, however, is that Damen offers cost-effective financing solutions based on their relationships with credit agencies and international finance houses. This is working exceptionally well for our African clients – in fact, most of our clients’ financing is funded by Damen Customer Finance. In the future, we would like to see more synergy developing between our client base and Damen. This would stimulate investment in local content and stimulate funding for shipbuilding.