A key pillar to the petroleum industry; the role of service companies can be viewed throughout the spectrum of the exploration and production operations. With the previous volatile climate, the industry’s service companies faced many challenges.

However, as economic indicators are showing signs of recovery, and as the government is currently focused on boosting the investment climate of the oil industry, Egypt Oil & Gas sat with Peter Baggaley, London Offshore Consultants (LOC)’s Group Energy Director for Europe and Africa, to get a better understanding of the perception of service companies of the current local market.

Focused on all aspects of transportation and construction in the marine environment, LOC is an independent marine and engineering consultancy and survey organization, providing high quality services to the shipping and offshore energy industries.  The company was established in London in 1979 and has grown into an international, multi-disciplinary organization, with offices across the world and a team of more than 400 professionally qualified personnel.

Baggaley began the interview by highlighting the presence of the long history of LOC in the Middle East and Africa regions, focusing on Egypt, where the company has been working on projects in Egypt for more than 15 years, mainly focused on offshore operations in the natural gas fields of the West Delta Deep Concession.  The increasing optimistic economic outlook will drive a greater demand for our services, which is why we think the time is right to establish a firm base and open our new office here in Cairo.

When asked about what they hope to add to the Egyptian market, Baggaley explained that “LOC is different because it is an independent, privately-owned company.  Owned by our staff, we are not subject to external shareholder pressure, and we can make the best decisions for our clients based on our experience and expertise.”

LOC offers a unique combination of marine investigation and risk management services in both the energy and shipping sector.  Independent of insurers, certification and classification societies, “we adopt a pragmatic approach and work to manage risk with the best resources available.  We are a very responsive company, providing comprehensive casualty response 24/7 around the world, every single member of staff adopts this mindset, enabling us to respond to project needs any time of day or night,” he went on to explain, “with more than 30 offices around the world, LOC empowers its local offices and staff, supporting them to use their local knowledge to make independent decisions.  This is backed up with the full support of the wider team, allowing any specialist expertise or knowledge to be easily and quickly drawn down to any project.”

Competitive Advantage and the Nature of the Egyptian Market

“Our biggest competitive advantage is our independence; we are a privately-owned company totally independent from class and certification organizations.  We have 33 offices around the world and they operate as locally empowered entities in each of these countries,” said Baggaley in discussion of the company’s main edge in the Egyptian market.

Baggaley stressed that the company’s new Cairo office will be staffed by local engineers and surveyors, “despite being part of an international group, it will not be reliant on expensive expat resources.  All of our services will meet LOC’s global quality service standards. Every project will be locally delivered and every client will have group-wide support offering any additional expertise, experience and skills 24/7 if needed.”

Further elaborating on their competitive edge, Baggaley highlighted that “LOC’s specialist experience advising on the transport of large scale modular infrastructure is likely to be in demand, where an installation is fabricated in modules in the Far East because of a lack of local resources or labor and then transported using heavy lift vessels to the place of construction and operation.  This approach can offer massive cost savings and can accelerate project delivery time dramatically.”

As a service company with an international orientation, the interview would not be complete without a deeper understanding of how the nature of the Egyptian market compares to others regions.

“The market is buoyant in Egypt, internationally we see the country as one of the few economic bright spots at the moment, enjoying significant investment internally and from abroad,” Baggaley explained.

He further highlighted that due to the positive economic prospects, the company has “some significant oil and gas projects underway and in the pipeline.”

LOC’s operations in the coming phase will remain focused on the West Delta Deep Concession, Atoll, and Zohr gas fields in the Mediterranean. “Our new dedicated office will help us to support our team better and will enable us to increase the range of independent specialist services that we can provide to our customers both offshore and onshore,” he added.

Possible Challenges

Entering or expanding in any market often presents a set of challenges, Egypt Oil & Gas asked about the main challenges LOC tends to face when entering a new market, and what the service company expects to face in its efforts to establish local operations in the Egyptian market.

In terms of their planned expansion in Egypt, Baggaley stressed that they “do not anticipate any ‘roadblocks’ but every market is different and obviously there will be a certain process of registrations and processes to complete in order to establish our business in this locality.”

However, generally speaking, “the main challenge is finding the right resources and employing the right people, our team works with integrity, professionalism and dedication.  LOC is known across the industry for delivering a specialist technical service, using the right complement of individuals.  Maintaining and consistently delivering on this reputation will be a priority on every project and with every customer. Secondly, we need to tell the market that LOC has opened a new office, is ready to take on new projects and is actively seeking new business.  We have a strong international reputation as an expert industry leader and we will be working hard to establish our local reputation.”

LOC Technology and the Environment

As a company focused on offshore operations, ensuring the welfare of the surrounding environment is often a crucial and skillful task, a topic which the regional director addressed by confirming that throughout their record the company had never had any issues in this regard. In fact, “the very nature of our business is to manage risk profiles comprehensively and effectively, this is the heart of what we do on every project,” he stated.

 

Market Impact

By nature, the private sector tends to have a significant impact on the economic welfare of any economy. Asking about Baggaley’s view on LOC’s potential impact on Egypt, he answered: “At a very simple level, we can provide local employment.  Through the establishment of our office and the growth of our business, we can offer a wider and wider range of international services, generating economic benefits for the region and employing more local people.”

“We believe that Egypt offers a sizable potential market, not least because one third of the world’s shipping passes through the Suez Canal, and we will be looking to develop our Cairo office to make the most of those opportunities.  Initially, our office will be six people comprising a mix of technical management and administrative support roles, supported by our global network, but new business growth will see new hires,” he elaborated.

Moving Forward

The interview was concluded with discussions on the future view of the company’s size of operation in Egypt.

“Our vision is to develop this office over time into a larger multi-function office supporting all of LOC’s business streams, [such as] marine warranty surveying, marine surveying, marine casualty response, and engineering consultancy.  I would like to see this office offering a full range of engineering services, including in time a detailed design capability that our sister-company Longitude offers, covering mooring, transportation, and motion response.   In the longer term, the Cairo office will act as a bridge into the North Africa markets giving access to countries to the west and ultimately to be our regional hub for North Africa,” Baggely stated.