How has the COVID-19 pandemic impacted Petromar’s operations?

The COVID-19 pandemic has had a significant impact on Petromar’s operations since March. It came at a time when Angola was already facing an economic crisis due to the challenging oil market in recent years. Before the pandemic, we were in advanced discussions with our clients regarding new projects for 2020. However, the operators reduced maintenance activities and postponed major investments due to the uncertainty caused by the virus. The implementation of extra health and safety measures, such as quarantine periods and extensive testing, also increased costs for Petromar. As a result, we had to demobilize a significant portion of our staff in Cabinda and Soyo, and we are currently working on a demobilization plan for Ambriz.

Which of Petromar’s main business lines, maintenance or construction, has been in higher demand in the last twelve months?

In the last twelve months, the maintenance business line has been more active for Petromar. We have been servicing clients operating plants or platforms, such as CABGOC in Cabinda, Angola LNG in Soyo, and Sonangol in Block 3. However, each client reacted quickly to the pandemic and reduced their workforce needs. In some cases, clients preferred Angolan workers as expatriates faced challenges in returning or staying in the country.

Our construction business line, which involves fabricating subsea structures at our yard in Ambriz for offshore developments, has continued, but at a lower volume of work due to project delays. Unfortunately, all new projects have been suspended until 2021.

Has optimism returned to the market since operations started ramping back up in August?

For maintenance activities, there is some optimism as our clients have immediate needs. We are hopeful that we can increase Petromar’s workforce in the fourth quarter of 2020. However, there is still uncertainty regarding development projects, and clients are cautious about making heavy capital expenditure investments. The potential for further lockdowns or a second wave of the virus has created hesitation. Therefore, we believe that mid-2021 is a more likely timeframe for the resumption of business in this area. Nevertheless, the needs in Angola for the coming years remain significant.

Has the Angolan government provided tangible assistance to oil and gas service providers like Petromar?

Petromar has been in discussions with other contractors through AECIPA (Angolan Association of Oil and Gas Sector Service Providers) regarding government support for service providers. So far, there has been some support in terms of managing logistics for expatriates. However, we have not seen any tangible financial assistance, such as the postponement of taxes or temporary adjustments in their application.

What experience does Petromar have with gas projects in Angola?

Petromar has a wide range of skilled personnel who have worked on gas projects across our yards. We have experience at the Soyo plant for Angola LNG. Additionally, our sister company, Kwanda Lda, manages the Kwanda Logistics Base in Soyo, giving us a strong connection to the gas environment. We are capable of providing mechanical and piping works for the expansion of production capabilities at the LNG plant. We can also partner with civil works contractors to assist in logistics and workforce management.

Do you think the lockdown showed the importance of a robust local value chain?

Absolutely. Having a robust local workforce is one of Petromar’s strengths. While we do employ some expatriates, our reliance on them is not as significant as other service companies involved in FPSO maintenance. The lockdown restrictions made it difficult to bring in many expatriates, so we relied on our Angolan welders and workers for a project with ENI at Ambriz. With minimal supervision from European specialists, our Angolan workers successfully completed half of the work manually. This experience demonstrated the importance of a skilled local workforce.

What would you like to achieve with Petromar in the next 12 months?

In the next 12 months, our goal for the fabrication and offshore development business line is to retain our skilled workforce and maintain our assets. We want to be well-prepared to offer the strongest possible service when construction activities hopefully resume in the second half of 2021. For maintenance activities, we plan to gradually increase our workforce in line with the needs of our long-term clients. Additionally, we aim to complete the expansion of our Ambriz yard by another 78,000m² in 2021. This expansion will primarily serve storage purposes but also open up further opportunities for Ambriz as a port.

Petromar has a track record of adapting to market conditions, and we believe our ability to adapt, combined with our skilled local workforce and physical assets in Cabinda, Luanda, and Ambriz, will allow us to navigate these challenging times and position us for growth when conditions improve.

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