Ropers – Chairman, GEP-AFTP – France
The chairman of GEP-AFTP, the French Association of Companies and Professionals in the Oil, Gas and Related Industries, discusses the association’s role in the worldwide promotion of French excellence in the oil and gas industry. The association has 1,320 members (220 companies and 1,100 professionals) and covers the whole of the oil and gas sector, from exploration to production, development, logistics, refining and distribution.
The GEP-AFTP was born in July 2011 following the merger of the AFTP and the GEP. To what extent the merger symbolize a need for combined strength to foster better relations with the French authorities?
Hydrocarbons have almost become a bad word in France. As a matter of fact, it is very difficult to meet important people from the administration regarding our members, which comprise the service contractors and equipment suppliers to the oil and gas industry. The challenge we are now facing in France is that everything has become oriented towards renewable and new energies. Even if this new trend is a reality, we are convinced that the oil and gas sector will continue to be an important part of the energy mix; it will be impossible to survive in this country if we don’t accompany renewables with oil and gas. We do not want to be in the same situation as the Germans who have had to switch to a higher level of coal in the energy mix, simply because they are short of power coming from renewables, thus emitting more CO2 than before.
What were the reasons behind the merger, and how would you say the entity today is different from the past two associations? In short, how are you ensuring that the GEP-AFTP is not just a bigger entity that keeps on doing the same thing?
To understand the current structure, one has to look at the organization we put in place after the merger. Twenty years ago, we had the oil majors Total and Elf, the research organization Institut Francais du Petrole (IFP) now named IFPEN, large service companies such as Schlumberger, Technip, Bouygues Offshore (now Saipem) and the FSH, a fund dedicated specifically to hydrocarbons, through which the government was supporting the sector. There was also the CEPM (the petroleum and marine research committee), which aimed to select the different innovations that deserved to be subsidized and pushed forward. The idea was that the subsidies were to be reimbursed only in case of success.
When the government decided that there would be no more financial help given to the oil and gas industry back in 2006/07, we decided to create an entity to replace the CEPM in order to support the projects of small and medium-sized companies. We therefore set up the CITEPH Program, which works on the same principle as the CEPM, apart from the fact that a project is submitted to the industry, which will then decide whether or not to finance it. It is a private fund and no longer based on subsidies. The advantage of this meeting of experts is that they continue to meet each other, which was the strength of GEP before its merger with AFTP. Indeed, it is far easier to conduct business when you know the person at the end of the line. GEP was created to help different companies and competitors work together. We have also taken advantage of the merger to create 14 technical sections, think tanks named CLAR (link, action and research clubs for development) in several fields such as economics, hydrocarbons and shale oil and gas. These structures are a mix of company experts involved in that particular domain. Many of them are freshly retired from the sector or are still active.
You have been president of the association since its inception. What have been your priorities so far, and what should be the main role of the association today, in your opinion?
GEP-AFTP exists to help the small companies help the large ones. My first priority since 2011 has been to keep GEP-AFTP’s activities rolling, to strengthen the projects already going on and try to attract people to join our efforts in different areas such as the CLAR or our different seminars like the Hydrocarbon Days for instance. We don’t want outsiders taking advantage of our services. As a matter of fact, we have increased the number of company members from 160 to 250. This means that we are indeed useful. But we could do far more if we had a better budget. Would you believe that we even have many volunteers working for GEP-AFTP? This proves the strong commitment of our members.
How has the sector performed in 2014?
Very few people know that France is the world’s second largest oil services industry in terms of exports with major actors such as Technip, as well as the 400 SMEs working in this area. There is definitely a lack of awareness regarding our position in the sector.
In 2013, the French petroleum service and supply sector had a turnover of EUR 39 billion (approximately USD 42.7 billion), 80 percent of which was made abroad, putting France among the world’s leading exporters. In our domain we are ranked the second largest exporter, before Norway and the United Kingdom, which have large activities at home. Direct employment represents around 65,000 people. We consider our performance to have been reasonably good for 2014 but we are still awaiting the figures.
The question is now about our performance in 2015. In order to understand what is going to happen in the year to come, you have to look at the way the industry is organized. There are three important segments to consider: exploration, development, and production & maintenance, plus abandonment. Exploration will suffer a lot, and particularly the geosciences, seismic and drilling niches, which are always the first ones hit. All in all, today, there is a big question mark regarding the exploration segment and which prospect is best to drill. Development projects already launched will continue, and the fields currently launched and in exploitation will continue to drive activity, but the question is what will happen once they are completed. We will continue to have to face financial issues and meet the financial requirements of shareholders. Meanwhile, the local government can reclaim a contract if the investment obligations are not met. In certain countries we will continue also to suffer to long decisions processes. Another disadvantage for us is that, unlike the UK or Norway, France is not a production center. We are therefore more focused on activities like development, platform design, well programs or geothermal activities.
The crisis has stopped or postponed a number of the anticipated developments worldwide, with a direct impact on human resources, which is still a prominent issue in our industry. Human resources are always the first to be reconsidered when a crisis appears; this situation has changed our industry and our approach and we are continuing to adapt accordingly. With USD 1 to 2 billion of development projects in the pipeline, companies must consider what they will do with their resources after contracts end. Companies rely a lot on external consultants who will therefore be the first to leave if the activity drops. I however believe this is not so much of a bad thing. Our companies have suffered from a lack of efficiency because of contracting too many expensive, so-called ‘experts’ as consultants. We therefore aim for the harmonization of salaries and a concentration of competent experts.
What are the other big challenges for this year to come?
Our biggest challenge at this point is coping with the companies around the world that are, unlike us, supported by their governments. For instance, today, the Chinese are indeed able to provide funds to help other countries to develop, provided they use Chinese companies to do so. It’s true that Chinese companies are not yet at the level of some of our companies here in France, but without innovation and support you cannot survive. Here, we are not supported at all!
What are, in your view, the most emblematic areas of expertise of this network of companies?
In my opinion, French companies are able to do anything that is asked of them, which is not the case for all. Furthermore, French companies are able to work together very well, which is not always the case in other countries. For example, for our large developments on the west coast of Africa, there is not a single first line company working alone: we have consortia and partners all working together. It’s not easy to build consortia that are efficient yet the French oil and gas industry has managed to achieve this. Thanks to these synergies and the quality of our experts, the French have a very good reputation and I feel that some contracts are given to French companies purely based on this good reputation.
Unconventional hydrocarbons are a polemic topic in France, especially shale gas. Is the industry in France at risk of being left behind in a technological revolution for the first time?
Not at all. The point is that France is not taking full advantage of its own expertise. We have, for instance, several excellent companies involved in onshore drilling, which is typical of what you need for this industry. Obviously, if some development happens in countries where we could have onshore drilling contracts, we have the capabilities at the ready. We also have first rank companies specialised in geosciences, reservoir engineering, and micro seismic. For this reason, and many others, I do not feel that France will be left behind in this technological revolution.
As an association and as a sector as a whole, how do you tackle this issue of attracting young French talent to the oil and gas sector?
The only problem we have comes from the reputation of oil and gas within France. In Aberdeen or Stavanger, for example, local engineers are born into the industry; and the places attract people from every corner of the earth the whole economy depends on the North Sea. Another issue has to do with the training of our engineers. Students graduating from our major schools such as Polytechnique or Centrale are not yet ready to spend years to be trained in order to become real experts. For many, it is a very demanding process. But the industry is very complicated today. When you develop a project in 2,000m of water depth, you need a very acute qualification and expertise that many fresh engineers are not ready to acquire. Nowadays, it is impossible for a young person just graduated to become a manager in six months’ time. Hence it’s critical that one masters a specific domain of expertise. It could be geology, drilling, construction, but whatever it is it’s extremely important to specialize in something at the beginning of a career. Afterwards, this industry gives very large technical and financial responsibilities to employees, managers or not.
What would be your recommendation to a young engineer in the sector?
I would tell him that oil and gas is a fantastic industry to get into. Just look at how it has evolved over these past several decades! I have been in this industry for more than 40 years and I’m still seeing the industry develop in news ways. I think that this alone is an attraction high enough for new generations.