Caspian Energy (CE): Mr. Mott, how do you evaluate global trends of development of geophysical and geotechnical services?
Christopher Mott, General Manager, SOCAR-FUGRO: We have good communication channels between us and our clients. We understand our clients’ requirements. When we come across a clients need without a standard solution we speak to our suppliers and use our own resources to put new technology forward to provide solutions. The most cost effective way of providing our clients with leading edge solutions is to use commercial off-the-shelf technology. We keep ourselves aware of these commercial-off-the shelf technologies through the channels that I have already spoken about. SOCAR-FUGRO is well-connected to the Fugro group which is a global organization. The Fugro group maintains communication networks that spread news about different ways of using commercial off-the-shelf technology to provide value added solutions to the needs of our clients.
If, for example, a better way of doing something is developed in Australia within the Fugro group, that development is available to us here in Azerbaijan. We can then use the same technique here without having to reinvent the wheel. If a client comes to us with a requirement that we cannot satisfy within our own resources or by employing commercial-off-the-shelf technology, the Fugro group has a large research and development department. The Fugro group spends millions of dollars a year on research and development, the focus being on bringing new solutions to clients’ requirements to the market. We are able to provide our clients with technologies that are unique to Fugro, focused on giving the client the data and the information that they require. No one can disobey the laws of physics but we are finding ways of using the laws of physics to provide increasingly accurate information and increasingly high resolution images of things that we survey. I believe that the responsibility of survey contractors such as SOCAR-FUGRO is to adopt new developments as they become available to the market and to look for channels to inform our clients about them so that these new techniques can be incorporated into their survey programs, improving the understanding of their seabed assets. Increasing accuracy and improving resolution leads to better understanding. The assets on the seabed are looked after in a better way and perform better in bringing hydrocarbons from the offshore oil-gas fields onshore to feed the country’s economic growth. A very important benefit of this, especially in the environmentally sensitive Caspian Sea, is that oil and gas leaks are reduced and eliminated, reducing pollution and benefitting the environment and the health of the ecosystem.
CE: What values does SOCAR-FUGRO regard as being of paramount importance?
Christopher Mott: There are different important areas. We have talked about technologies. And from the technological point of view one of Fugro’s cornerstones is to provide a world-class service wherever it operates, including here in Azerbaijan. Our objective is to do work for our client which adds value to their business so that they benefit through working with SOCAR-FUGRO. That is the technical and business value proposition. We also aim to be a good employer, looking after the welfare of our employees, providing them with proper career structures and equipping them with the hard and soft skills that they need to be productive. We also recognize that we are a part of the society in which we operate. We try to benefit society, both its citizens and its environment, and above all operate as safely as possible to prevent injuries to our people, the people that we work with and the people that we work among.
CE: What importance does the company attach to ecosystem impact related issues?
Christopher Mott: We are accredited against the international Environmental Management Standard ISO 14001 which requires us to behave in a responsible way toward the environment. We monitor our effect on the environment and our carbon footprint, which we are continually seeking to reduce. We control hazardous substances in an internationally recognized way and, before we perform any task, we carry out a risk assessment of that task to make sure that it is done in an environmentally sensible and responsible way.
CE: To what extent has the situation in the market changed taking the pricing for energy resources into account?
Christopher Mott: Well, that is a macroeconomic factor. We will be affected by it but we cannot control it. In general terms, the lower the price of oil the less our clients earn for a given volume of production. And if you earn less you spend less. I think 2014 was a challenging year for the industry. Companies were deferring plans, there were not many cancellations but some projects were postponed. The major international oil companies of the world have been increasing their bank balances to satisfy their stakeholders, restricting their spend on projects. They have been monetizing assets rather than developing new ones. This has had an effect on the global industry.
CE: What are the technical capacities of Fugro?
Christopher Mott: In terms of the water depth Fugro routinely operates down to 3,000m below sea level. It has some assets that are capable of operating down to 4,500m. SOCAR-FUGRO is capable of operating at all water depths in the Caspian Sea. The depth below the seabed to which we operate depends on the specific technique we are using. Geophysically we can penetrate the earth down to 2 or 3 km. Geotechnically, meaning drilling in holes into the earth to get the samples of the soils and rocks beneath the seabed, we limit ourselves to depths of less than 1km beneath the seabed. These limits are not driven by technology. Our knowledge and expertise lie in these relatively shallow parts of the earth. It is from these zones of the earth that our clients require the information for their subsea construction activities. That is as deep as we need to go to do our job. If the client wanted information from deeper than that, they would want it for a different purpose and would use a different scale of technique. We supply a service that our clients require in order to build things, on land or under the sea, that are stable and safe. This only requires us to penetrate into the earth a relatively short distance and is our specialty. The purpose of our oil & gas clients is to extract hydrocarbons. There are specialist contractors that assist them to deal with the extraction of oil and gas. They use similar techniques but at a different scale.
CE: Does SOCAR-FUGRO have technologies for detecting unconventional resources?
Christopher Mott: I would say that we don’t have technologies that would be used directly in the search for shale oil or shale gas but our techniques are capable of detecting gas hydrates. Gas hydrates occur in relatively deepwater and at the low temperatures found in the sediments close to the seabed. I am not an expert in this area but I believe that these hydrates are very widely spread and, if they could be successfully exploited, the reserves available to the world would exceed those currently available through the resources of conventional natural gas. The technological challenge, as I understand it, is to be able to commercially and successfully extract the gas from the sediment. I am not aware if that challenge has been met yet. However, Fugro has technology to detect the presence of this resource because the gas lies close to the surface of the seabed. If it is present in large quantities we can detect it with our geophysical techniques. And if it is leaking from the seabed into the water above in the form of bubbles, we can see those bubbles and we can also capture the bubbles and send the gas to the laboratory for analysis.
CE: How do you evaluate the outcomes of 2014 for SOCAR-FUGRO?
Christopher Mott: We are ending 2014 on a high note. We have currently got two vessels at sea conducting surveys. And we are looking forward to a satisfactory 2015. This year offshore activity has been subdued because there have not been many offshore projects taking place. But we were quite busy onshore carrying out geotechnical survey work in Sangachal and at Sumgayit. We have just signed a new contract with a big international oil company to renew a master services agreement which will continue to enable us to deliver our offshore and onshore services in Azerbaijan. We are very pleased about that. The contract is valid until 2018 with the possibility of being extended. We know that there will be work to be done under this contract, but the specific work-scopes are as yet unknown to us. We definitely plan to continue to develop our business in Azerbaijan. We are in touch with oil and gas companies operating in Kazakhstan and Turkmenistan but we don’t have any firm plans to operate in those two countries at the moment.
We are aware of the big developments that are taking place elsewhere in the Caspian region and if an opportunity presents itself we will be pleased to get involved.
