Oil & Gas Inside Interview with Eng. Said Riad – CEO, SAPESCO Africa Energyboardroom
Eng. Said Riad, CEO of Sahara Petroleum Services (SAPESCO), introduces the story of SAPESCO, one of the most successful Egyptian oilfield services companies with over 30 years of experience, its strategy for successfully navigating the industry downturn in the past few years, the case study it accomplished with Shell during 2016 in the cleaning of the Benfield system, and his executive outlook on current optimism in the Egyptian oil and gas industry.
Eng. Riad, can you please give our international audience an introduction to Sahara Petroleum Services (SAPESCO) and yourself as CEO of SAPESCO Africa?
"2016 was truly a year of survival. We focused on maintaining our market share – and where possible, to grow – and to survive with the bulk of our people and the company intact."
SAPESCO is the oilfield services arm of Sahara Group (Sahara Projects and Investment Company – SPIC). Very recently, as part of our 2016 strategic plan to overcome the market challenges, SAPESCO was restructured into SAPESCO Africa, managing Egypt, Libya and new markets in Africa; SAPESCO Gulf Cooperation Council (GCC) to manage Saudi Arabia, Kuwait and the United Arab Emirates (UAE) and other operations in the Gulf region; and SAPESCO Offshore Services focusing specifically on subsea projects. SAPESCO is a regional success story and one of the fastest-growing companies in the region.
I have spent my career working for a number of oilfield services companies (OFS), starting with Halliburton since 1989, then Schlumberger, Expro Group and Geoservices, where I was sent on assignments in Paris in France, the North Sea, Nigeria, South Africa and Yemen – before joining SAPESCO in 2001 as a technical manager in the measurement services division.
From 2002 to 2013, SAPESCO team started to build what we like to call our empire. During this time, we added many subservice lines to SAPESCO and opened many affiliates in countries like Libya, Saudi Arabia, Kuwait and United Arab Emirates. In 2009, I was promoted to Country Manager for Egypt, then to Corporate Business Line Manager in 2012. During this time, I also started another project, which is now the Sahara Technical Institute (STI) and part of Sahara Group.
Fifteen months ago, I returned to SAPESCO to manage its regional operations and six months ago, the Sahara Group board promoted me as SAPESCO Africa CEO to oversee SAPESCO's activities in Egypt, Libya and the rest of the African continent.
The past few years have not been easy for the oil and gas industry. How did SAPESCO manage to weather the storm?
In the middle of the downturn in mid-2015, after oil prices had collapsed, SAPESCO was facing what I called a devil's triangle. The oil and gas market in Egypt had collapsed, the oil price had fallen and competition was intensifying. SAPESCO struggled during this time – to be quite honest – and we had to implement a new strategy just to survive. In particular, the OFS sector in Egypt has seen a price war in the last few years as investment fell and pressure from oil and gas companies to lower service prices increased. We have also had to rethink our pricing strategy, lower our operating expenses and work harder to maintain our market share and retain our clients.
2016 was truly a year of survival. We focused on maintaining our market share – and where possible, to grow – and to survive with the bulk of our people and the company intact. In order to deliver on this, we had to focus on offering our customers new solutions to gain an edge over the market instead of just offering them a static portfolio of services and products.
SAPESCO started in 1986 as a coiled tubing company and this still remains our core business. For instance, now in Egypt, we are the market leader in Coiled Tubing services, having managed to retain it through the downturn, and we have expanded this segment into Libya and the UAE.
Speaking about offering innovative solutions instead of just products to your clients, can you highlight any particular project that was a success?
One of our biggest challenges in 2016 became one of our greatest successes of the year! Shell was facing a significant scaling problem in the Benfield system and they searched for a solution for a long time to no avail. No service company, not even the original manufacturer, managed to find a solution – in the entire world. SAPESCO's chemical solutions division, which was relatively new at this point, spent six months working on this case and managed to devise a solution that works with a 100 percent success rate.
Shell now considers this one of the top five best operations for its global operations last year and moved forward with the planning and execution of the second Benfield aystem anticipating similar high quality results by utilizing SAPESCO technology. No one believed that SAPESCO could succeed where so many international giants have failed, but Shell spent over two months studying and auditing our processes in Egypt till they became confident that the solution works. Just two days ago, this new solution was accredited by Texas A&M University and we will also be publishing it officially at the SPE International Conference on Oilfield Chemistry in Texas, USA, in April. This conference will allow us to announce ourselves as a chemical solutions provider for the oil and gas sector globally, not just locally or regionally!
SAPESCO has grown from its core offering in coiled tubing to offer a range of services, competing head-to-head with the big guys. How do you manage to offer such diversity with a much smaller workforce?
Firstly, we are a very experienced company with over 30 years of OFS expertise. We have a team capable of providing the best solutions to the customer. They are constantly updated with the newest technologies and they work hard to implement these technologies with their experience to find solutions tailored to the customers' needs.
Sahara Group more broadly also tries to complete our portfolio as a group. For instance, SOG is the Group's E&P arm, operating concessions together with the Egyptian General Petroleum Corporation (EGPC). SAPESCO is the services arm. We also have a drilling company which also has an API certified machine shop, Valve and Tools, just to name a few. STI, as I mentioned, is our specialized training institute.
Frankly speaking, I believe there is no difference between the big international companies and SAPESCO because at the end of the day, we are providing our clients with the same quality and expertise. We use almost the same equipment and similarly qualified staff. Our efficiency and achievements are very comparable with the big OFS companies. For instance, our contract retention rate is over 90 percent – and set to increase further this year as we still have a number of contracts pending final evaluation. This is testament to the quality of our work and our people.
This is not always apparent, however. Our current clients know us because they have already seen our work. But for new clients, it is true that it is a bit difficult to establish that first connection and convince them that we are as credible as the international OFS companies. Our long term experience, track record and qualified people help us to overcome this challenge at many occasions.
You mentioned STI earlier, the Sahara Technical Institute. Why did SAPESCO feel the need to invest in a training center?
One of the main issues in Egypt is the gap between the capabilities of university graduates and technicians, and the actual needs of the oilfields. We started STI to try and bridge this gap by implementing a blended program that would qualify fresh graduates to work in the oilfields. As a result, the program offers not just classroom training but also practical training, in both simulated settings like laboratories and real-life settings like live wells. We are able to offer this through cooperation with our affiliate SOG, which is a real advantage.
The top five graduates each year will also be offered the chance to join SAPESCO which becomes part of our annual recruitment plan so this is a win-win situation.
It was my experience in international companies that inspired this idea. Oilfield companies do have training institutes but typically in their HQs in the US or the UK, not in Egypt.
Despite this gap as you mentioned, we do see a lot of Egyptian expertise regionally and even globally in the petroleum sector. What do you attribute this to?
One factor is that many of the big international OFS companies have been present in Egypt for a long time, and many Egyptians joined the international OFS and major E&P companies in the 1970s and 1980s. By the 1990s, Egyptians were beginning to replace expats in the affiliates here. This means that an extremely qualified workforce was developed during those two decades.
"Many of the big international OFS companies have been present in Egypt for a long time, and many Egyptians joined the international OFS and major E&P companies in the 1970s and 1980s."
As I mentioned, I was one of those Egyptians in the 1980s! Many of the colleagues that started with me then are now in senior executive positions in various oil and gas companies around the region. This is not only good for Egyptian companies and Egypt but for these international companies as well, and contribute to the prestige and credibility of the Egyptian petroleum sector globally.
SAPESCO is not just a big local company, it is also a regional company. How important are your operations outside of Egypt?
We believe we have significant expertise to contribute in the region. Outside Egypt, for instance, we have invested over USD 50 million. We also have aggressive expansion plans to expand in Algeria, Chad, Sudan, Kenya and Tanzania. Algeria is the largest producer on the continent so it is obviously a very attractive market for us. I had actually wanted to enter the market a few years ago but the global oil downturn limited us. In Sudan as well, there are huge opportunities there because the difficult environment has limited investors so they are very interested in having more companies enter. In Kenya too, there is great potential in upcoming drilling projects,
We have learnt from our experience expanding into the GCC. Initially, it was quite difficult as the big players had been established for 30 to 40 years. In Saudi Arabia, for instance, the prequalification process just to participate in tenders could last up to two years, and then winning the tenders would be yet another challenge. But Saudi Aramco has actually been very helpful in terms of providing opportunities and assistance to new entrants, especially smaller companies, as they would like to increase the competitiveness of the Saudi oil market too, In GCC only we invested over USD 25 million, for instance we have 2 contracts with Aramco in KSA, one contract with ADCO in UAE and one contract with KOC in Kuwait. We also have expansion plans in GCC.
We have found that Egypt is an extremely useful base to be expanding regionally. Our key clients like Apache, Shell and BP have worked with us in Egypt very successfully, and so we are able to build on those relationships in other countries. The trust comes from the Egyptian affiliate.
Egypt seems to be undergoing a new era of transformation. As a local observer, how do you feel about the future of Egypt's oil and gas industry?
It is undoubtedly a new era for Egypt's petroleum sector. You can feel the optimism in the air – because there is concrete evidence of increased activity. Companies are reinvesting in the sector here. You can see more drilling, seismic surveys, etc. taking place; drilling rigs are busy again – these are all good indications that the industry here is booming again. The oil prices are finally increasing and this will clearly encourage IOCs to increase investments here.
At SAPESCO, we firmly believe that only Egyptians can build Egypt. We are pleased to have the opportunity to support the oil and gas business in Egypt and to collaborate with the Ministry of Petroleum and Mineral Resources on its Modernization Program by offering our services, solutions, facilities and capabilities. We are also not limiting this to the oil and gas sector; we want to use our advantages to support the overall economy. For instance, we are now pursuing projects in petrochemicals and power as well, to use our skills and expertise in the oilfield sector to contribute and add value to pre-commissioning projects in these areas.
As Egypt grows, we hope that SAPESCO will contribute to and grow with it. I expect that SAPESCO will be double its current size in the next five years.
Do you have a final message for our readers?
SAPESCO – with our experience, our dedicated team and our capabilities – can support anyone anywhere. We can do it!