Just as I sit down with Nabil Al Alawi, the almost four decade veteran of the oil and gas industry and CEO of AlMansoori Specialized Engineering, one of his trusted managers – 14 serve under him across the business – politely interrupts, informing the boss that a customer has just paid a not insignificant sum for a contract that has recently been completed.
“Now we need to think about the next step,” muses Alawi. His employee agrees – “Yes, step by step,” he concurs, before making his exit.
Without prompting, Alawi says: “Trying to get money from clients can be like pulling teeth. The oil industry is going through a crisis, we’re seeing ups and downs. I’ve been in the oil industry since 1965, and I’ve seen the ups and downs, but this particular one is different. Nobody seems to know why [it is happening], and nobody knows how long it is going to last.
“That means there is insecurity, and when that happens there is a tendency to become very conservative, to keep as much as they can because nobody knows what is going to happen. Clients around the world are having cashflow problems, so trying to get payment after a job is done takes a lot of effort and energy. We spend a lot of our time being money collector instead of focussing our energy into making progress and concentrating on becoming better.”
It is confirmation of what everybody in the industry already knows – times are tough, particularly for service companies that have seen margins squeezed. And, Alawi tells me, it is not just payment that has become more difficult to collect, so have contracts.
“Everybody is looking at the bottom line, and when that happens it can be easy for companies to forget about what they actually require, which should be the best service possible.”
‘Service’ is a word that comes up time and again throughout the hour long conversation, and it is clear that Alawi is passionate about the idea of meeting and going beyond his customers’ expectations. And a one-size-fits-all approach is not going to cut the mustard in such a fiercely competitive market, he says.
“Delivering what a client wants is not just about meeting your contractual obligation,” he states. “It’s about understanding what is in the head of a client. You have to realise that an Indian client, for example, is going to have different expectations than an American client, in the same way there will be differences between a British client and an Arabic client.”
Alawi says that he impresses this approach on all of his employees, as he believes it will form unbreakable bonds with clients.
“Happy clients do not want to leave you. When a customer like this puts out a tender for work, they will get in touch and ask us what they should be including in the documents, so that there is no barrier for us to be awarded the work.”
Such relationships could be the difference between service companies that are competitive and those that fall by the wayside in these turbulent times. But while Alawi concedes that the industry is going through a ‘crisis’, he has perhaps surprisingly ambitious plans for 2016.
“We are proud to say that when an employee joins us, I want them to join for life. So when there is a downturn, most of the companies terminate the contracts of some of their employees. I have seen that in every downturn I have lived through, but I personally have never terminated an employee because of a downturn in the market. It costs me a lot of money to train staff, and I see my people as my assets, so that’s the last thing I want to do,” he comments.
“The downturn for me is a chance to reflect on how I am running my business, and how I can learn to become even more efficient and to be better – it is an opportunity. We’re going to hire 400 people in 2016, not cut staff, and we’re going to achieve double digit growth – I’ve already done my budget.
So what is the secret? “That’s actually very easy to answer. I have my market; whatever I have I will never lose it. I know I can be ferociously competitive with my market share, and keep that market. Then the opportunity is the market that my competitors have – that’s what I’m targeting.”
Alawi says the company will concentrate on improving market share in the GCC – mainly in Saudi Arabia, Kuwait, Oman and, of course, the United Arab Emirates.
“These four countries have huge growth potential because they are producing more oil than they have previously,” he says. “Every time they produce more oil, they need more service. The clients are going to be giving this work at low, low rates, and those that can compete at those low rates and going to prosper.”
Alawi says AlMansoori is very much in that bracket of companies that can live within those tight margins.
“We are very fortunate that the core of our business is in the GCC countries, so we don’t really see a downturn as far as our business growth goes. The major part of our work is in an area where more oil is being produced, so the business is growing, albeit in a market where customers are asking for rates to be discounted. That’s why I’m hiring another 400 people; my business is growing, although if you look at the bottom line it is smaller, while the turnover is bigger.
“Being able to grow while customers are asking for discounts is a difficult thing to do, but we are in a fortunate position, because we have high-quality existing assets so we don’t have to buy new equipment. That means we are able to turn a profit and that is a big advantage over some of my competitors who are new to the market.”
AlMansoori is adding to that existing set of assets with two production testing and stimulation vessels, both of which it has already agreed contracts for. The vessels offer onboard testing equipment and have been designed to conduct production testing on oil and gas wells with high H2S and CO2 levels. The oil production/testing capability of the vessels can accommodate up to 15,000 bpd with re-injection using oil re-injection pumps and can test single or multi-well developments and to allow full-scale production tests to be performed at remote offshore locations with the minimum of down time.
“The focus in the Gulf is to produce more gas, and to do that you have to go very deep,” explains Alawi about the thinking behind the investment.
“To do that, you are working with tight formations that need stimulating. What is needed for that is to frack so that the oil and gas can flow. The deeper the formation, the harder that is. Offshore work needs a vessel and clients are tired of having to work with vessels that are not purposely designed. So when the price of oil was $110 we decided to invest in two new vessels, and now the market is low. But we’re fortunate that it’s a niche market and although the price is low, it still represents an extremely healthy return on our investment. It was the right decision and there is huge demand for this type of vessel.
“This boat is going to last 20 years, so it enhances our position and puts us in a better position to offer the client services and there are very few service companies who have this kind of vessel in their service offering. Both of them have contracts from the day they will arrive, the first with ZADCO and the second is for ADMA-OPCO.”
The deals strengthen the company’s 35-year working relationship with ADNOC: “We are on first name terms with a lot of people at ADNOC, and they are comfortable awarding us long-term contracts because they know the level and quality of service they can expect.”
Alawi also speaks proudly about the company’s relationship with Saudi Aramco, stating that the organisation’s ‘performance-driven’ aligns perfectly with AlMansoori.
“Aramco is really performance-driven, if you work well, they’ll be more. I would say it is the only client that we know of that is completely performance driven. Aramco will give you a contract, but never guarantee you any work. The understanding is that if you perform, work can be sustained, if not then you’re out. We are a performance driven company as well, so that is something I am very comfortable about – no problem.”
