An International Shipping Company’s Operations in Egypt: Interview with Bab Reijntjes, Managing Director of Vroon Offshore Services

An International Shipping Company’s Operations in Egypt: Interview with Bab Reijntjes, Managing Director of Vroon Offshore Services

What is your background in the international shipping industry, and what is your experience within VROON Offshore Shipping?

I have been in international shipping for over 25 years. I started as an agent for an owner with bulk/container vessels in Rotterdam. Later I spend 11 years in London with a Japanese shipping line and ship owner before moving to Vroon in 2004. In 2008 I joined Vroon Offshore Service, first in our Den Helder (Netherlands) affiliate and from 2012 in our Genoa (Italy) affiliate.

Could you tell us more about VOS and the services you provide worldwide?

VOS supplies offshore support vessels to the offshore industry in a wide range of activities during offshore field development. Our vessels are engaged in seismic and survey activities, during exploration for supply and anchor handling, and during production with IMR (Inspection, maintenance, and repair). Our aim is to provide these services with good quality, relatively new vessels, dedicated and professional crews, where safe operation is equivalent to efficiency and excellence in operations, at a good price/quality ratio. Our focus on excellence also means hands on approach on fuel efficiency, which provides an additional value to our clients in the day-to-day operations of the vessels.

Where has your primary focus been, in terms of geographic locations?

VOS primarily focuses on the North Sea, the Mediterranean (including Black Sea and Red Sea), and Southeast Asia. However with our current new build program of 36 PSV/AHTS for delivery in 2015 and 2016, we are looking at expanding our markets providing we can maintain our high standards our customers expect from us.

What types of vessels does VOS operate, and which specifically are the ones that operate in Egypt?

VOS operates ERRV (Emergency Response & Rescue vessels), PSV, AHTS and sub sea support vessels. Through a different affiliate, called MPI, we offer windmill installation vessels and windmill maintenance vessels. In Egypt we predominantly operate medium sized AHTS and PSVs.

What are the most common services supplied in Egypt by VOS?

Our first job in Egypt was for a deepwater project where one of our subsea support vessels was used for trenching activity. Since then, we have been engaged in rig towage and positioning, as well as in exploration supply. At the moment we are mostly servicing production supply and IMR support. Recently we have also supported some seismic campaigns with seismic support vessels.

Who are some of the companies VOS deals with in Egypt?

We are working with some of the larger oil companies and joint venture (JV) companies in Egypt, but we prefer not divulge detailed information pertaining to our clients.

What has VOS’s experience been working with the oil and gas sector in Egypt?

In the Red Sea the operations can be quite intense but generally the level of professionalism offshore and onshore is at a decent level to perform the services well. On the other hand, the contractual situation, especially with the JVs and the overall tender process is quite complex and at times frustrating. It can be very price-focused, but we have seen good signs in the recent years where safety and quality have become paramount to price. I believe this is an important step to take, as this is a driver to improved efficiency that will ultimately lead to the benefit of Egypt and its people.

Where does Egypt rank within VOS’s worldwide operations?

Within our Mediterranean business Egypt ranks second. World wide it is in our top 10.

What is VOS’s biggest achievement in Egypt?

Our biggest achievement is to set up a successful partnership with Pan Marine and setting up a sustainable business in Egypt. Although Egypt is a liberal ‘Maritime’ market, free to all so-to-speak, the entry barriers are quite high and it takes determination and some courage to succeed. I am quite proud that we managed to do this and now have a solid market position.

What are VOS’s plans and goals for its future activities in Egypt?

Considering Egypt is the largest OSV market in the Mediterranean, and one of the larger ones in the areas where VOS operates, our intention is to increase our fleet and our market position within the next years. Providing of course that oil and gas activity keeps moving forward. The current outlook is somewhat depressed. Nonetheless the potential is very high and we can easily see growth in our current market position to a more leading one overall.

How much does VOS plan to invest in Egypt over the next few years?

With growth of our fleet the investment will increase and might become more substantial, but it is difficult to put a number on. However we are already moving a fairly large amount of our supplies through local suppliers and we have also started to employ some Egyptian seafarers on our vessels.

In your opinion, what are the main difficulties that the shipping industry faces in Egypt?

As I said, the contractual situation and the tender process with the JV’s are fairly unbalanced and it takes quite some risk for an owner to enter in such contracts. This is a deterrent for quality tonnage to enter the market. In order to overcome a possible lack in supply, the tenders take a wide range in specification. In such cases you end up competing on the wrong points where, for example, a quality, high fuel-efficient three-year-old vessel is compared to a 25-year-old vessel, but offered at half the price. It sustains a substandard fleet of vessels that operate in Egypt and prohibits a realistic view on the cost of a quality vessel. In the long term, efficient and safe operations lead to many more cost reductions then the short-term gain on cheap, but substandard, vessels. We have seen signs this is changing, but it needs to be pushed more radically from the top.

As a shipping company, how does the product sharing agreement fiscal model for oil and gas exploration in Egypt affect VOS?

In any climate that motivates oil companies to invest and explore activities offshore, there are opportunities for us. We believe there is lots of potential in Egypt, and the sooner the government resolves the issues with oil companies and gets the oil companies motivated again, the better. This would be an improvement for all, but mainly for Egypt itself.

What do you think Egypt’s government needs to do in order to attract more investment in the oil and gas sector?

I do not think I am qualified to answer this question, as this is not my field of expertise. However where I come from we believe that if you pay your bills on time you have no problem finding good suppliers. I suspect the same can be true for governments.


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