Medserv plc, the logistical support base operator for the Mediterranean oil and gas industry, has secured “substantial business” for its new technical support service from the Libyan market as it also prepares to grasp opportunities in Cyprus, chairman Anthony Diacono and director Anthony Duncan told The Times Business.
This is a new revenue stream which gives a lot of scope for growth
In its interim financial statements on August 31, Medserv said repairs to subsea structures and maintenance to platforms are being carried out as Libyan oil production returns to pre-war levels.
“We have noticed a void in the Libyan market due to the situation there and we strengthened a technical support unit we developed in-house,” Mr Diacono said when asked to elaborate. “This allows us to offer new services in maintenance of substantial nature to interesting clients. This is a new revenue stream which gives a lot of scope for growth.”
The technical support services portfolio could include procurement of specialised parts to maintenance work and light engineering work around the country,” Mr Diacono added.
Medserv registered a pre-tax loss of €680,589 for the first half of the year to June 30, down from a profit of €141,137 achieved in the first six months last year. After accounting for taxation, the net profit to June 30 amounted to €9,765 when compared to a profit of €125,697 for the six-month period to June 30 last year. The group’s turnover for the period under review amounted to €2,545,888 compared to €3,914,590 in the first half last year.
“It is fair to describe the results as disappointing but at the same time they are encouraging,” Mr Diacono said. “The situation in Libya was anything but normal. If anything, we got the timing of the recovery wrong. What is happening in Libya is extremely difficult to gauge.”
Recent violence in major cities like Tripoli and Benghazi will slow down the return of oil companies which were to start exploration but Mr Diacono believes this is an immediate to short term effect. Organisations with Libyan operations are going about their business and many believe the situation could be the catalyst to spur the local authorities to do what they have avoided until now – dealing with the security situation. A new government is in place and the recently appointed prime minister is seen to be taking action.
Medserv’s directors are optimistic.
“We concentrate on the offshore industry that is vital to Libya’s rebuild. The production platforms out at sea are up and running to pre-war production levels and expansion plans to increase this output are being put into effect as we speak. This is our market. Malta is seen as a secure place from where people can operate until the security situation is resolved. We are already seeing an upturn in the second half of this year, in preparation for an interesting 2013. This is tied to the expansion of offshore operation that is the main focus of the Libyan government.”
The company’s Misurata base has not seen any new business from oil companies renewing operations but fee income is tiding the Libyan operation over. The damage caused during the uprising was not significant “considering the circumstances” and repairs have not been carried out as yet.
The Freeport has not had its board of directors appointed, causing problems where decision-making is concerned, but a new board is expected to constituted within the next few days.
“They have taken a pragmatic approach in Misurata and people operate very much as before. Our rental business is running and it does not require too much administration. On the ground, the Libyans recognise the obligation they have to repair our warehouse but we are not pressing them as they have other priorities and we understand – it is very difficult to take decisions when an infrastructure does not exist and we are impressed with the way things are moving.”
Medserv’s Maltese general manager and its Libyan financial chief are back in Tripoli as is the Malta support team and the chief operations officer. All the local staff –10 in total – have been retained.
Meanwhile, the company has signed a lease at Limassol port to enable it to launch its offering to the industry offshore Cyprus which is evolving into a regional player. The Eastern Mediterranean is currently seeing Cypriot and Israeli exploration operations and some plans coming out of Lebanon. Medserv will also be able to service Egypt from this location and the directors say the company has been approached from organisations operating offshore Egypt.
Medserv Cyprus Ltd signed a lease agreement with the Cypriot port authorities some weeks ago and plans for a base are being finalised. Medserv has secured the space for the base and is competing for business with others on the ground. Five licences are to be awarded in Cyprus. Working closely with its partners, the company will be managed by a Maltese and non-Maltese team.
“We do not think ‘passport’ any more. It is all about knowledge,” Mr Diacono added. “Professionals who have knowledge, are loyal to our brand, and can deliver will find a place in our team. We are a service company and our foremost asset is our team. We spend a considerable amount of team looking for good people. We are a flat organisation. However, as we expand geographically we have to expand the management team.”
The directors emphasised how during the war year, Medserv set about increasing training for its teams and improving their conditions in a bid to avoid talent leakage. More than €1 million was invested in a equipment including a heavy duty crane and ancillary equipment and funds were also channelled into plant refurbishment.
“The security situation in Libya has hindered the return of some experts. The only people around in our sector doing this kind of work were Maltese, essentially Medserv. The foreign firms need their Libyan offices to be manned and they are looking at Maltese people for those posts.
“We were concerned our professionals would be poached but we have only lost one person from the team to a significant project. The decision to sustain the human resources costs paid off.”