By Nadine Abou el Atta
As Egypt enters the era of economic reform, industry players have reported different views regarding the trajectory the market is taking, while most expect a positive outlook, the sector is yet to recover from the challenges it faced during the previous years.
With a focus on service companies, Egypt Oil & Gas sat down with John Evans, Country Manager of Fugro, to understand how international players see the market in Egypt, its current challenges, and its potential in comparison to other markets.
Fugro is a global player in energy and infrastructure markets, specialized in geo-intelligence and asset integrity solutions for large constructions, infrastructure and natural resources.
What are Fugro’s future plans of expansion in Egypt?
We have just introduced a new offshore survey vessel to the market, the Kobi Ruegg. It is purpose-built, equipped with the latest technology to carry out a wide range of survey activities, in water depths from ten metres to thousands of metres. The vessel will undertake its first survey project, for PICO International Petroleum, this November. The Kobi Ruegg will be based in Egypt to support the country’s oil and gas sector, and will additionally undertake projects abroad in the Mediterranean and Red Sea.
Another investment Fugro has made in 2017 is the establishment of an onshore geotechnical division to undertake site investigations for major civil construction and infrastructure projects. The division includes an accredited soils laboratory for testing of soil samples. We are investing in new premises in Zahraa Maadi to support our expansion. The new premises will allow us to move to a single site that includes modern offices and laboratories, workshops, warehouse and yard space.
How does the company’s technology and strengths affect its market share and presence in the industry?
I believe we have strong capabilities, based the skills and experience of our staff, the technology, and the resources that we maintain in Egypt, which we enhance through training and investment.
Furthermore, we are also able to bring in other specialist technologies from the Fugro Group, as –and when—required. This allows us to maintain a strong market presence through fulfilling the requirements of our clients.
How does Egypt compare to other countries Fugro operates in, in terms of growth potential, company market share, and general outlook?
The Egypt market is better than many other markets, especially those in Europe and Asia, where investment in the oil and gas sector has fallen a lot. However, it still lags behind markets in the Arabian Gulf, where there is a lot of investment both in onshore and offshore oil and gas projects.
Fugro operates globally in an array of services; why does the company only operate in the petroleum sector in Egypt? And are you considering entering other industries in Egypt, namely renewables?
Our marine division operates mainly in the oil and gas industry; yet, our new land division also provides services to renewables, such as wind farms, and civil projects, new ports, desalination plants, power stations and refineries.
What are the main challenges faced in the Egyptian market?
Receiving payment from our clients can be slow. While this situation did improve for a while, it has now deteriorated again. Some clients are very slow payers, taking more than a year to settle our invoices.
In your opinion, how has the floatation of the EGP, the current reform program, and new laws impact the industry in general, and Fugro in particular?
The flotation of the Egyptian Pound presented a very difficult time for the company as we faced a loss in currency value worth several million dollars.
However, it is important to note that the flotation was necessary for the long term benefit of the Egyptian economy and hopefully this will allow us to convert Egyptian Pounds into foreign currency in the future.
How can Fugro impact the industry in Egypt? And in your opinion how can the private sector affect the industry in Egypt?
Fugro can support any large energy or civil construction project, whether on shore or offshore, so can provide crucial services and expertise to support Egypt’s development.
The private sector is important to provide new ideas and investment in order to create new companies and jobs and grow the economy in general but needs the government to create the right environment and regulation for it to thrive.
Given the current focus to improve the investment climate in Egypt, in your opinion, what steps should the government take, and which roadblocks for the private sector should be addressed?
Generally speaking, I think the government in on the right track, by focusing on making it easier to do business in Egypt. With regards to our activities, these are sometimes affected by delays due to customs and permits as well as slow payment, which all slow down our projects and therefore affect our clients and the economy. In the future, full convertibility of the Egyptian Pound will also be important to encourage continued inward investment.