Fugro SAE was established in 2004 as a subsidiary of Fugro Corporate. Fugro’s specializes in the acquisition and synthesis of data. Their activities fall under the broad headings of geotechnical, survey and geosciences divisions. Fugro utilizes sophisticated technology and expertise to survey land, costal lines, and offshore as well as deep-water environments. Supplementary to surveying, data collection and analysis, Fugro also provides a variety of other services that facilitate infrastructural development and maintenance to ensure smooth transition amongst project phases of exploration, extraction, development and production. In this vein Fugro offers a wide variety of services to the oil and gas sector, the construction sector as well as the mining industry.
Egypt Oil and Gas Newspaper recently sat down with John Evans, General Manager of Fugro SAE to discus a variety of issues impacting Fugro’s activities as a service company in the Egyptian Oil and Gas sector.
During this period of transition in Egypt what are the most common challenges facing Fugro SAE?
Liquidity is the biggest challenge facing the industry. Delayed payments from the government – estimated to be seven billion dollars – will negatively impact the sector as a whole. As a service company we are not directly affected. However, in the future delayed payments will impact big players in the industry, British Gas and BP for example. This will result in significantly delayed projects in the next year. The joint ventures working with the Egyptian companies are suffering and will suffer more in the future in 2013.
How does the political situation factor in?
I think people are very concerned about the political situation not only because of the unpaid and delayed payments but also due the absence of a plan or schedule concerning when these dues will be paid.
Are people in the industry facing anxiety concerning contractual responsibilities in Egypt?
I don’t think it has reached that point yet. Payment is what is concerning. For example, we just started working with Gupco but we can see that their operations have been hindered by lack of payment. They aren’t getting their money back as a result of cost recovery issues. Gupco’s operations have also been limited due to an inability to obtain diesel fuel for the ships they operate. The payment issue will have an impact on every entity within the sector. Its cyclical, its an acute issue that trickles down and affects operations. Another example, it will be difficult to get new concession agreements approved because they must be approved by Parliament. At this point, I am not sure if Egypt will have one in time.
In researching the international petroleum contracts or agreements the bulk of content revolved around financial mechanisms, very little about environmental regulations. What kind of environmental regulations do you encounter in Egypt?
There is environmental regulation in Egypt. I don’t know how strict you would describe it. All oil companies are required to conduct an environmental baseline survey before they start their activities in a concession; it is compulsory to do that. Several oil companies in the past have gotten into trouble by not doing it thoroughly. However if you are government company working in Egypt you don’t have to adhere to the regulations as much as a foreign company working in Egypt. The foreign entities need to be squeaky clean in terms of environmental regulations and activities, whereas an old established company, a government company would be able to find ways around such requirements. I’m not saying the Egyptian companies would bypass these things it just wouldn’t be such a high priority. The mentality applies to other realms as well, HSE, for example. As an international company we have pretty high standards of health and safety, however for certain domestic companies standards wouldn’t be so high. There is a definite difference in working with a multinational company as opposed to an Egyptian company.
Furthermore, Fugro is about to be recognized by British Petroleum for health and safety performance, no incidents. We have worked with them for five or six years and just completed one hundred and forty days project in the West Nile Delta. No lost time, no incidents.
We’ve made continual development and improvement since we were established in 2004. We are accredited to ISO 14001 standards and we have environmental improvement programs which we run, but it can be difficult in the surrounding environment. If we want to dispose of our waste in a safe manner we have to find contractors to do that for us and its not always easy to find the right contractor. Our operating standards in Egypt are as high as they would be anywhere else in the world. We have been recognized by the Fugro group and received a Golden S.A.M Award (Safety Always Matters) an award for health and safety compliance given out amongst sixty or so Fugro subsidiaries.
What are your plans for the Mediterranean, a new bid round coming in?
The Mediterranean bid round is good for us in the long-term. I think that will be a good indication of the way the country is going. If there is a lot of interest from the foreign oil companies, that bodes well, a positive indicator. There is a lot of interest concerning how the Israeli – Cypriot border dispute will turn out. Generally, the Mediterranean is quite promising. British Petroleum has big plans for the area and British Gas needs to keep investing to get the gas flowing because Egypt is now short of gas. We see the area of the Mediterranean as quite promising, it’s a deep-water environment. It’s a good environment for us, a company with technological expertise and experience. It’s a good environment to be working in to develop business and differentiate yourself from your competitors.