The year of 2011 has been a challenging year for most petroleum companies, but having three out of four branches located in Arab countries, which have been experiencing political and economic unrests, has further hardened the progress of Petrographics. The 100% Egyptian oil service company has been struggling this year to maintain its ambitious development plan, believing that the expansion in the African market is the best solution during this critical time. This is what Mr. Hany Abd El Halim, Chairman of Petrographics explains further in this interview
What is different about Petrographics compared to other competitors in the Egyptian market?
Petrographics was established in 1992 as an Egyptian oil service company, with 100% Egyptian shares. Over the years, we have succeeded to expand the platform of our operations through the establishment of new branches in other countries, such as Libya, Algeria and Syria. And, we are currently eyeing more expansion in the African Continent.
In terms of services, Petrographics has three core businesses. The first one is providing integrated data management services and solutions for the oil & gas companies. Data management is simple in its definition; however, it has a very effective role since it secures the risk of the companies within the sector. As it allows the data to be more organized, justified and easily retrieved which eases the decision-making process. As for the second core business, it is about what the processing center provides. It is considered as one of the latest technologies, which exist in Egypt. Besides, the seismic data processing allows us to provide a unique outcome, which requires huge resources whether it is regarding software or hardware.
Finally, the third core business, which is believed to be the most important, is mainly about the reservoir characterizations and management as well as data inversion. It combines the Geology and Geophysics. We already have solutions to minimize the risk of the companies regarding the locations of the wells. We also have unique software, which is fracture detection. As we offer better studying for the choosing the drilling areas. In this field, we have many well-known international clients such as Oxy and Eni.
Where do you rank Petrographics among other competitors?
The wide range of services provided by Petrograpohics engages the company in a continuous competition race with other companies.
Regarding the Data Management, we have SAPESCO and Spectrum. While in processing, we have Western, BGS, CGG, Spectrum and Guide. And for Reservoir characterization, there is Western geophysical as well as Fugro.
As a matter of fact, the company tends to diversify the services provided to the petroleum industry at a high quality, which strengthens the company’s competitive edge.
Higher quality and more variety of services solidify the company’s credibility and reputation in the market. Also, the expansion and inauguration of new branches in neighboring countries reflect the stability and steadiness of Petrographics as well as allowing the exchanging expertise.
Petrographics provides integrated data management services and solutions for Oil & Gas Exploration companies in the areas of seismic processing and interpretation, seismic Scanning and Vectorization, Well Log Scanning and Digitizing, Petrophysical Analysis, Magnetic Tape Copying and Reformatting, among other land surveying services.
To achieve our commitment of providing the best services to the petroleum industry, Petrographics’ ongoing research and development programs couple scientific research and technological development to present the most advanced technologies and insure the desired optimial performance.
Operating in Egypt, what are the major challenges that face Petrographics?
One of the major obstacles facing our company in Egypt is the pricing issue. In order to produce a high quality product or supplying advanced services, it necessitates a high cost. In our projects we have professional consultants who require high salaries. On the other hand, in any domestic tender, the number one aspect is the low price, regardless of the level of quality. So, we are always seeking projects where unique and advanced services are required. Our worst fear is the declining prices that will force companies to provide low-quality services, which will consequently have a negative effect on the Egyptian petroleum sector in general.
To what extent has Petrographics been affected by the current political and economic unrests?
Honestly speaking, we have been affected by these unrests, not only in Egypt, but also in most of the Arab countries where similar situation of economic and political trembles are taking place.
The coming period is very challenging on all levels. First, on the level of development plan, the attempts to increase the volume of our operations and projects are subject to the level of stability in the Middle East in general. Secondly, in the middle of such critical period, we have to maintain a safe financial surplus, while trying to lure more profits at the same time.
The issue is that most of the countries, where Petrographics is holding projects, are going through unprecedented political changes that lead to the the postponement of some projects due to managerial problems. We are currently watching closely the political situation in these countries to assess the possibility of resuming our operations.
However, we have been implementing our 2011 projects according to the plan we set, regardless of the challenges we are facing. Also, the expansion in the African market has been a positive factor to make up for any drawbacks.
What is the volume of loss in Libya due to the recent instabilities?
The losses we encountered in Libya are considered very minor. We had to withdraw all our Egyptian employees and bring them back home. Petrographics applies the universal HSEMS (Health, Safety and Environmental Management System) for the geoscientists, technicians and administrative employees.
Petrographics exerted efforts to ensure the safety of all the employees and at the same time tried to support the Libyan citizens by sending food shipments during the toughest days of their revolution.
What was the company’s 2011 plan?
During this year, we can confirm that the plan has been implemented despite the current situation. We have focused more on the African market in order to open new frontiers for Petrographics.
Being more politically and economically stable compared to many Arab Countries, the African market has been our way out during this year. Petrographics sealed a number of agreements with Liberia, North Sudan and Ghana. This latter is considered the most important agreement due to the flexibility of the agreed upon terms, which facilitates our entrance into the Ghanaian market.
On the other hand, Petrographics faces a vigorous competition in Nigeria, as we currently work hardly to conclude an agreement with the Nigerian authorities.
What are the factors that contributed to the company’s expansion in Africa?
Honestly, I give credit to the Egyptian ambassadors who coordinated with our company to receive these contracts. They have used their connections to facilitate our entry to these new areas, gathered the information we needed, provided data about the oil and gas figures and supported our business plan.
What is the volume of the company’s current investments, compared to last year’s?
The total investments of the company during the current year stood at $5 million, which is nearly 50% lower compared to last year’s $11 million.
How will you make up for this investment drop?
As I mentioned earlier, opening new opportunities in the African market is our best solution now to narrow down the decline of investments.
What are the present projects implemented by Petrographics?
Petrographics has recently been awarded a project in the U.A.E by Itok Group, which is a data management contract. Similarly, the company signed another data management contract with the Kuwaiti authorities, which is due to commence this month.
Besides, the company is implementing a Magnetic Tape Copying project for RWE Dea.
In your opinion, how effective is the role of the Egyptian companies abroad? Would they help luring more investments into the country?
Definitely, there is an effective role of the Egyptian companies operating abroad. From one side, receiving contracts abroad generates revenues to the Egyptian economy and opens up the door for more Egyptian activities. On the other side, securing projects in other countries to be executed by Egyptian companies can be the channel for attracting investments from these countries to the Egyptian market. Hence, it is a fruitful contribution on all levels.
Although it is very challenging to conquer the vast African market, Africa is the new frontier for any petroleum company seeking fruitful expansion, especially in the fields of oil and gas exploration and production.
If you are appointed the Egyptian Minister of Petroleum, what will be your first decision to make?
I would give the green light to openning more Egyptian petroleum markets in the African countries.