Investing in local content in Mozambique could pay dividends later

Gas&Oil

The East African country of Mozambique has been in the press often in the last five years as large gas reserves have been discovered offshore – reserves that could provide much-needed opportunities for owners of offshore vessels

In 2012, Mozambique became a household name in the offshore industry when a country whose GDP is ranked 124th in the world by the CIA World Factbook was found to have the 14th largest proven gas reserves. The opportunities for the offshore industry and the country seemed boundless, at least until the global oil crash came and oil majors Eni and Anadarko applied the brakes on E&P spending. As a final investment decision (FID) has yet to be reached, this puts pressure on both the government who were relying on the tax revenues and suppliers looking to make investments.

One thing what will be certain is that Mozambique will be a positive place for operators of offshore support vessels to work, although it is uncertain when that will occur. As Block 4, the Coral Field, is a deepwater exploration, development and production will require the support of the worldwide fleet of large anchor handlers, platform supply vessels and subsea construction and support vessels. Onshore development of terminals, re-liquefaction plants and general infrastructure will be tug and barge based, providing opportunities for West African, Asian and Middle Eastern operators of smaller equipment.

Despite having a long coastline and its ports of Maputo, Beira and Pemba providing access to its many interior neighbors, Mozambique does not have a large merchant navy or a deep pool of maritime professionals. According to the World Factbook, 81% of the population is employed in the agriculture industry, so there are huge challenges for Mozambique to capitalize on the gas industry by enforcing local content requirements. Operators of offshore support vessels have seen the dramatic opex inflation that can occur when strict local content rules are applied in a market where insufficient investment has been made.

Mozambique currently has only one STCW training institution certified by the government body INAMAR – ROTC Pemba Bay. This institution is a joint venture between local Mozambique investors, STC BV, the large Dutch maritime training provider, and companies in the offshore and port infrastructure industries, with the objective of being able to provide internationally accepted training standards within the East African market.

Célia André, general manager of ROTC Pemba, said market conditions are very challenging with delays in investment decisions in the gas industry resulting in ROTC expanding into onshore industrial training. Ms André expressed frustration that international companies are looking to external training providers rather than looking at opportunities within Mozambique to use a local training company to train local workers. “It’s like they don’t know we exist,” Ms André said. “We have a new fire-fighting training module delivered to add to our wide range of courses, but companies are using training companies from their home markets.” Ms André further explained that training outside the country for internal projects may not be the best option. “Mozambican authorities often do not recognize certificates of competency issued by entities that are not locally accredited, not to mention the high costs that training outside the country adds to the projects,” she said.

The Mozambique workforce is caught in a Catch 22 situation with the delay in tax revenues restricting the government’s ability to sponsor training and the oil companies not yet investing in developing local content. This could result in two negative scenarios for operators of offshore support vessels as the market develops: very high opex as operators fight over the few locals who are trained or a reduction in offshore safety as untrained personnel are rushed in to fill vacancies. Companies serious about operating in Mozambique waters will be well advised to start training locals and using them in their fleets in order to be ahead of the market if local content rules are enforced.

By Philip Woodcock

General manager, Workships Contractors BV

Source: Offshore Support Journal

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