Demand for in-country fabrication services at its highest yet – Routledge

…says shore bases have helped fuel demand from oil & gas sector

With demand from the oil and gas industry at its peak for in-country fabrication services at its highest level yet, the recent move by ExxonMobil Guyana Limited (EMGL) to scout the local market for companies that can supply fabrication and other related services is a recognition of that demand.
During a recent interview on energy perspectives, EMGL’s President, Alistair Routledge explained that the company’s partnership with shore bases such as the Guyana Shore Base Incorporated (GYSBI) and now the Vreed-en-Hoop Shore Base Inc. (VEHSI) have played a large role in driving this demand.
“What we’re doing is we’ve made in the past, strategic investments and decisions with local suppliers, such as the Guyana Shore Base, Vreed-en-Hoop Shore Base. And those enabled more work to be done in country. So, the next phase we’re looking at, is to say ok, now that we’ve stimulated some of the fabrication activity on the Vreed-en-Hoop Shore Base project.”
“As we look down the line at more mature assets, these multiple FPSOs (Floating Production Storage and Offloading) vessels that are being installed, we’ll anticipate that there’ll be repair activities, maintenance activities. And all of that generates additional work,” he explained.
This additional work takes the form of fabrication and machining. According to Routledge, the intention is to send the right signals to the market, allowing investors to pick up on cues to where the best areas for long term investments are. This would strengthen the local market and present more opportunities for local businesses. And Routledge made it clear that in-country fabrication is preferable to Exxon going overseas, making the demand for this service evident.
“At the same time, it would support the (oil and gas) industry as it matures. Its more efficient than us having to go overseas for that support. So, what we said is, the nature of that work is that it tends to be project based. So, one project will come out, maybe for 100 tonnes of steel, 300 tonnes of steel to use that benchmark. But any fabricator needs to know that in a year, they may have 1000 tonnes of steel to work on.”
“So, what we’re trying to do is say, what are the different types of machining, fabricating capabilities that are needed and we anticipate in the future. This won’t be a certain number, it will range. And what are the existing capacities and what are the types of capacity that investors are considering investing in. And we will try to give an aggregated picture from the companies working in the industry,” he further explained.
According to Routledge, his company is doing its part to help build the local market, while at the same time making the long-term demand for in-country fabrication services as clear as possible for investors. He noted the importance of investors feeling assured that if they invest in training, equipment and quality assurance, the opportunity will be there for them to make use of this investment.
In a notice last month, EMGL had revealed that it was seeking detailed, technical information from local companies via a market condition survey. The survey will be gauging the existing in-country capacity for fabrication, machining and repair works to support oil and gas operations locally.
Some of the services covered in the market condition survey include tertiary steel fabrication such as handrail and structural steel, secondary steel fabrication such as pipe supports and control valve repairs and primary steel fabrication such as compressor refurbishment and carbon steel pipes.
According to Exxon, it will be using the responses to the survey, which are due by December 20, to prequalify bidders for upcoming projects. In addition to the usual high standards of work expected from bidders, Exxon noted that they will also be expected to include a preliminary local content strategy.
This means that those who are prequalified will be required to show how they will deliver local content expectations and may even be required to submit those plans to the Government, in which case copies will also be required to be submitted to the oil major.
To date, 290 tonnes of green steel have been fabricated by local companies for two FPSO vessels- 50 tonnes for Prosperity FPSO and 240 tonnes for the ONE GUYANA FPSO. This number is expected to increase for Jaguar FPSO that will service the Whiptail development, which will see an additional 316 tonnes of steel being fabricated by the local companies. (G3)