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Interview

Salim Mouici – Country Director, Baker Hughes Algeria

21.07.2015 / Energyboardroom

Baker Hughes’ North & West Africa cluster manager talks about the company’s history in Algeria and the solutions Baker Hughes brings to the market to match Algeria‘s current economic environment.

You took the position as the head of Baker Hughes’ West African cluster one and a half years ago, for a total career of 18 years in the company. What have been your priorities since you arrived? What does it mean to you in terms of professional interest?

Professionally speaking, I certainly have taken the full measure of the fact that in this region formed of Tunisia, Morocco, Mauritania and Algeria, human and cultural diversity is absolutely admirable. Each population has a way of approaching the world, and this multiculturalism in our region is an advantage in a country like Algeria, the largest country in Africa.

Since I arrived, our priority as a service company has been to anticipate and understand in advance the future challenges and expectations of our clients. We work to identify the elements that will bring added value to our customers, through a proactive approach. We want to understand the market and the directions it takes, understand the aspirations of customers to develop the most appropriate and cost effective solutions for them.

What is the strategic importance of the North West African cluster to Baker Hughes from a global perspective?

The cluster has a little over a thousand employees, which represents almost half the staff of our organization in North Africa. In terms of activity, the ratio is about the same.

Each country in this cluster has market features of its own. In the case of Mauritania, the country produces almost 10,000-20,000 b/d: there has been an effort in exploration in recent years. So in Mauritania, Baker Hughes supports its customers mainly by means of exploration-oriented products and services: drilling and reservoir evaluation, for example, and, on operations that take place in very remote areas. The challenges are definitely those related to logistics, and equipment performance and suitability. Mauritania has little infrastructure, the oil industry is very nascent, even blank to some extent.

Then, there is Morocco, where the oil industry is small, characterized by small operators in comparison to other countries. Moroccan players are small, independent companies. Baker Hughes operates there both in the upstream and downstream markets, including power plants and providing chemical solutions.

Tunisia has a mix of small and large operators, including multinationals his market is attractive precisely because of the diversity of players. Moreover, its ease in logistics is also a characteristic feature.

We also operate in Algeria, a market with very intense activity: Sonatrach alone manages over 100 rigs. The context is quite difficult, in a desert environment; sometimes the infrastructure also reflects this reality on the ground. From an administrative point of view, tremendous improvements could be made.

The country’s needs are real, regarding both energy and employment: this country has a very large talent pool, there are quality technical schools and universities that provide access to people that are qualified, which enables us to recruit from local talent, bringing many advantages. There is a great diversity of customers as well, including Sonatrach of course, which remains the main contractor and accounts for about eighty percent of the market. The rest is formed of consortia and international companies.

Baker Hughes’ history in Algeria is very rich, and dates back to the beginnings of the market; the first well drilled in the country used Baker Hughes completion tools, and the first horizontal drilling here was done using Baker Hughestechnology, in Hassi R’Mel. We have been present almost from the beginning of the oil industry in the country, through various subsidiaries. In particular, we have been responsible for the introduction of many technological innovations: every time a technology would be introduced in the United States, Algeria would be one of the first countries to benefit from it, in order to improve performance of the various operations in logging, drilling, and completion. Baker Hughes has been a pioneer of technology introduction in the country.

We recently introduced our latest innovation in multi-stage fracking in Algeria, which can dramatically improve production. That is the whole point for us to bring this type of innovation that improves productivity.

What has been Baker Hughes’s greatest achievement in Algeria?

We have had several successes, which are the pride of this company. The first is related to human capital: the team is almost entirely composed of Algerian nationals, at all levels of the company. Our second achievement is that we have been long time partners to the various oil companies, and have supported them via the introduction of technologies, and also in the reduction of overall exploration and production costs. We commit to constant evaluation and improvement of performance, so as to be cost effective for our customers: they get to reduce their own costs through us introducing new technologies. We have managed to gradually increase our market share and presence across the country, and have become an important partner in the Algerian oil and gas sector.

Given the current downturn in the oil price, do you see a change in customers’ requirements? How do you position yourself in the country?

As a consequence of the tendering system in Algeria, operators and service companies have always worked to make the fairest offers possible. Therefore, as the evolution of tender results reveals, for years, prices have generally tended to fall from one cycle to the next. This is of course related to the constant improvement of cost control and therefore the possibility to pass it on to the clients. It is also related to the fact that the system ensures fair competition between companies, urging them to make sure that their offers provide maximum competitiveness. Moreover, cost distribution is also reworked after contract attribution. This way, when oil prices started to fall, Baker Hughes had already been in a cost-control dynamic for a long time.

It is a fact that we observe an evolution in customer demand, for they are concerned that they have optimal cost management in place, yet there is hardly any elasticity: in order to keep up our operational efficiency, quality and safety standards, there comes a time the price demanded is too low to be of interest to us. But being in a globalized market, we manage to find some balance between the development of our resources and service at the best possible price.

What have been some of your most important projects over the last two years in Algeria?

We have operations throughout the entire company portfolio. Among other things, we have won 50 percent of all of Sonatrach’s directional drilling project . We have also been working on reservoir assessments projects, on which we have a relatively significant share of the market. Similarly, we work on challenging completions projection, in which we also have a significant market share.

One or two years ago, we started additional product lines, such as integrated services and reservoir studies. This way, we became partners with oil companies when they needed integrated services: On the integrated Services, we were present in Hassi Messaoud, and also have three development rigs and four exploration rigs in the southwest. In addition to this, we also managed an additional two production rigs in the same region. We have been the only service company to manage exploration rigs in southwest Algeria. We also managed to win market share in reservoir consulting. Last, we have introduced technologies that improve well production.

Although technology has evolved, Algeria’s recovery rates have not really improved over the years. The average is around 30 percent. What solutions does Baker Hughes offer regarding this issue?

Algeria‘s challenges are diverse. For each type of reservoir, whether it produces oil like Hassi Messaoud, or oil and gas like in the southeast, whether it has conventional porosity or permeability, or lower ones, we have to develop different approaches. The need to understand the reservoir upfront is even more essential when faced with these challenges. The early analysis and understand enables us to quickly determine the best fit-for-purpose solution possible.

Depending on the reservoir, the range of possibilities can stretch from regular completion solutions, such as the use of chemicals, to the use of innovative completion technologies to optimize reservoir production: this is the role of our multi-stage fracking technology, which can increase the production of both conventional and non-conventional rigs. It is also the case with smart completion technologies, which allow simultaneous production from multiple reservoirs by one single well rig. There are also directional drilling techniques and horizontal drilling, in which we are leaders, and which make it possible to drill from the best spot into the reservoir in order to maximize production. Last, we offer a large portfolio of artificial lift solutions. In my opinion, artificial lift in the future will count among top EOR processes, in Algeria and elsewhere in the world.

As far as EOR is concerned, it is crucial to target the adequate technology, for there is no one good solution: usually, it is a patchwork of solutions and processes that must be adapted to each case.

What are the key success factors in Algeria? What should be put in place so that Algeria becomes a central hub for Baker Hughes, among the four countries of the cluster that you lead?

Compared to the other three countries, the size of our operation here is the largest. Not only do we hire people according to our operational needs, but we also manage this resource within the framework of our corporate social responsibility policy: we recruit students, trainees from the various training schools in Hassi Messaoud and elsewhere in Algeria, in order to train them. Algeria is actually the center of Baker Hughes’ influence in this region, since it is here that we are working to grow our expertise and know-how of excellence, which can then be exported all across this part of the continent and around the world.

CSR and HRM seem to be at the core of Baker Hughes’s strategy. What aspects most reflect this under your mandate?

Gender diversity has been a priority for us, and today, at all levels of the company, we have an balanced split between male and female employees. I am particularly pleased for example that one of our latest recruits in specialized engineering is a young woman who has been ranked number one in the world in her field during a training session in Houston.

Diversity is an important matter for any company: we are fortunate in Algeria to have people coming from every part of the country, at all levels of our company, who bring incredible richness to the life of Baker Hughes. This is the great richness of Algeria, and it has become Baker’s own richness as well.

What are your plans for Baker Hughes in the region for the years to come?

There are two things that we want to develop. The first relates to our major client and will be to raise our company to a certain level of closeness throughout our people and technologies that will make Baker Hughes a pillar-partner to the oil and gas operators. The second thing in the coming years will be to cultivate this attractive dynamic of our activities in Algeria in order to keep our investments growing, bring in the necessary resources, make sure that we complete our contracts and manage income and operational costs in an effective way. This way, Baker Hughes’s presence in Algeria will perpetuate in the long-term, allowing the development of local skills, as well as the export of the Algerian expertise. To contribute to this will undoubtedly bring us great pride.

Click here to read more articles and interviews from Algeria, and to download the latest free oil and gas report on the country.

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