The Upper Reach Team interviewed Mr. Paul Abela, Chairman of Ablecare Oilfield Services Group, and asked him about Malta’s importance and role in the oil and gas industry. He talked about the origins of his company and why Ablecare Oilfield Services Group is dedicated to investing in Malta and helping it become a regional service and logistics hub. He also explained the various expansion plans the company is contemplating and how they contribute not only to the sector’s development but to the island’s development as well.I would like you to give us a brief picture of the oil and gas sector in Malta. How is it positioned?
First of all, we should take a brief look at Malta’s importance in the oil and gas sector dating back to the Seventies (of the previous century). Malta was a centre for oil and gas companies. At the time, we had the major players of the sector; a lot of oil executives used to be positioned in Malta when the drilling in North Africa was starting. There was activity here and Malta was considered a safe place to keep families of executives who were working in North Africa. And it was an exciting time.
Over the years the significance was diluted because there was more settlement in North Africa, so there was a move from Malta to North Africa. Also, Malta was going through a moment of concentrating its economy on tourism and the manufacturing industry, so we were not very focused on the services industry. The services industry was incidental to what was happening. So Malta has a history, and it comes from its position, its safety and from the fact that Malta is a good place to live.
Now, in the past 10 or 15 years, the reality of the requirement of logistics support started to come more to light, and this was also thanks to the communications systems and globalisation. So, with the initiative of Maltese entrepreneurs, Malta’s geographical position and the legislation that has been passed through Parliament to create a strong financial and legal base, it is natural that we entrepreneurs, businesses seek those niches, which are flourishing. And oil and gas is a sector with its ups and downs, but the downs are not as low as those of other businesses because, when there is a slump, there is maintenance that needs to be done; when it’s busy, then it’s busy. So, one can swim with the wave of oil and gas.
We have been in this business for the past 13 years and we have seen continuous growth here in Malta. There was no year or month in which we have seen demand go down. Demand is increasing and there is scope for this industry because, in parallel, Malta was proving itself to be the ideal location in the Mediterranean to come and operate: operate from here as a base, doing business in other neighbouring countries. For example, Malta was always a relevant partner and played a significant role in operations in Libya, in various sectors, not only in oil and gas.
We have to consider also that Malta has developed its communications network; we are not isolated any more. With its size and strong legislative, financial, legal, ownership and banking frameworks, Malta meets most requirements for them (Libya). In the oil and gas sector especially, and from the experience we have, when decision-makers visit and see the operations here, they feel safe. Their people feel safe; their people like to stay in Malta. We don’t have border issues; we don’t have internal conflicts.
So, Malta is placing itself in the centre of events happening around us. The Arab Spring elevated Malta even more and the government’s policy and approach (has been) to promote business and be diligent and cautious, selective – not opening the doors to everyone but inviting the good names; it is easy to attract the wrong persons here. We are finding support from the government to promote Malta.
Our vision as Ablecare is: We promote Malta. We want Malta to be the best and we, as a group, want to be number one in the best possible Malta. So we promote Malta as the best island and our vision as a group is to be the best on this island, providing services to the oil and gas sector.This company was created in 2001, so it’s a young company. Tell us a little about the company’s history.
Yes. I have been in business for the past 33 years and I owned one of the leading mechanical and electrical engineering companies in Malta (Elesolar). I was involved in several projects – national projects, development projects – and, as everything in life, the best things are those that come to you simply by accident. We got into the oil and gas industry purely by coincidence. The only thing is that the partners who came from abroad saw a potential in our group, in us as a company, and we grew from there. My decision, then, was to run down and close the mechanical and electrical engineering part of my business and to concentrate on the oil and gas industry. The reason is that this sector needs a lot of attention. It’s a 24/7 industry, so it wears you out. Once you are in it, you can never stop. It’s a rollercoaster.
Our company moved step by step, building a reputation. I am very cautious and my people are very cautious. With the client we always try to give our best and we grew with the industry. Obviously, we attract business to Malta, so that is why the key players need to be professional – need to put their action where their mouth is. We are not acting as brokers trying to go somewhere, broker a deal, make the money and the deal is done. As Ablecare, we try to attract people to come and do business in Malta; we attract people to use Malta and that is our strength. Even when we go to operate abroad for our clients, we still keep Malta as a base. It all starts from Malta; Malta will always be in the centre of our activity.
Today our company enjoys a good reputation in the industry. We have progressed year after year and we are very confident and very comfortable with the future. Here, we are not on shaky legs – shall we do it? Shall we not do it? We are convinced of what we are doing because the market is there, the demand is there, the capabilities are there and Malta will be up to the challenge.
The nice thing about Malta is that you can feel that the island is helping you while, if you go to Italy, for example, you try to do something but you feel the place, the bureaucracy killing you. So, you are also fighting the culture… Instead, Malta embraces you; once you are doing something that you believe in, it helps you and pushes you forward. So, we are confident. Obviously, we run our business very professionally; we don’t react on emotions or management by crisis or by copying others. If we believe in something, we sit down and we do it. If we do not believe in it… if someone else is doing it, let him do it. It’s not the way forward.What about the internationalisation process of your company? You have branches in Israel, Spain, Tunisia and Egypt. Why are you internationalising?
We are a service provider and the oil and gas industry is propelled by the input of third-party service providers. That is why I said that even when we go abroad we still keep Malta as the centre. For example, we were asked to investigate setting up the operation base and support in Israel because there was a contract for drilling there. What we do is to go and put ourselves in a legal position in that country. We do not risk going there acting like brokers, operating from a hotel, fixing the deals and coming back. We don’t operate like that. We go there, put our face on the front line so we are answerable for our actions and also carry our professional approach from here to those countries even with the clients. And the clients like it. We go there; we register; we pay taxes; we pay what is due. We are there with a face and front.
That is what we did in Egypt and that is why we have a branch in Spain – to pay taxes in Spain on what we earn. But when you are operating in Las Palmas, we invoice from Spain, we receive the money in Spain… We do it legally, because the fundamental rule and requirement in the oil and gas industry is that things should be done above board. Also, we are continuously scrutinised under the UK Bribery Act and the American FCPA (Foreign Corrupt Practices Act). Ray Ciantar, a Company Director, is the person responsible for compliance and we make sure that we are always in compliance with these regulations. We make a legal set-up. When we are operating there we rent offices and houses – whatever is needed – but we are a legal entity in that area.
This is the internationalisation of the company – our clients know that, if they are going to go to Egypt, all it takes is a phone call. We can be there and we are operational. Now we are in Morocco, for example; we are there for one well only. We have everything set up and we put ourselves in a legal framework because it is the way forward for businesses to grow, to be transparent and to be credible.I would like you to expand about the project in Valletta Harbour. Give us a little overview.
The government of Malta issued a request for proposals for the development of the ex-Malta Shipbuilding Yard in Grand Harbour with four distinct categories. One of them was ‘a repair and service centre and logistics base for the oil and gas industry’. It was also requested that it should be a proposal that utilised the whole site, not parcelling it out. Being a service provider and already operating in part of this area as an oil and gas service and logistics base, we submitted a proposal in line with the government’s requests to invest and build a complete service, maintenance, recertification and logistics base for the oil and gas sector, to the industry’s highest standards.
Our proposal puts the client in control of the project; it is also based on the integration and involvement of third parties. It is not an exclusion project – it is mine and nobody comes in. No. It is an inclusive project. It puts focus on the client; in fact, we put a lot of weight on the buildings we are renovating for the clients, who will come here. They are in control of the project. Malta is providing – I say Malta because we use Maltese workforce, we use Maltese support and we use a lot of local content. Malta is supporting and is playing a role with the international companies that come here to carry out and fulfill their projects. This is the future. This is how one can grow and integrate.
I am very confident about our proposal. It would be a big disillusion for us if we fail and are not awarded this project – not so much for us because we can simply go to a nearby place and do it. We are being invited everywhere; it would be a loss for Malta if we don’t grasp this opportunity to make oil and gas a pillar of the economy. You have to consider one thing: the budgets on a maintenance job on a rig vary from US$50 to US$100 million on one job, which is a lot of money by any standard. Most of that money will be spent in Malta, be it $10m, $15m, $20 million; for Malta $20 million is a lot of money. There are sectors of the economy that don’t generate that wealth, but the oil and gas sector can generate wealth.
The overspill is big. Apart from the jobs, which pay two or three times more than other jobs, the foreign experts who are here – 50, 80, 100 – who are being paid their wages from their parent company but then spend their money in Malta while they are here. So the overspill we calculate at the very least is $2 to $2.5 million a month going straight into the local economy. That is just from one project – not the whole site. That would leave you a direct $2 to $2.5 million going to hotels, taxis, restaurants, to purchasing consumables, laundry – the small things. So, we are confident.Are there any projects for exploration here in Malta because of the proximity to many fields in Libya?
Yes, but it would be a mistake if Malta’s relevance in the oil and gas industry is pinned to local exploration. That is secondary to Malta being a five-star hub for the general oil industry. Local exploration is secondary to this role. Why? Because if we focus on creating an industry around local exploration, we will never attract the big names. And you need to attract the big names: companies – not to mention names – with strong financial backing.
The Malta well cost less than US$30 million. Wells where there was success cost $100 million or $120 million. So it’s the strength of the oil company that is conducting the exploration. Let us attract people to operate from Malta; let us make Malta an attractive place. It would be a mistake to put exploration on the forefront of making Malta a hub. The hub must be built and created as a service hub; the local drilling will be secondary to that.
Last July there was the drilling of the Malta well, which was not a success. We were responsible for the crews. It lasted 25 days – start, stop and out. Genel closed their offices. They left everything. So that’s why it would be a mistake to create Malta’s relevance because we are conducting oil exploration. Malta’s relevance is independent of the exploration; Malta’s relevance is in logistics, in support, in being Malta…You were mentioning before an academy. Can you tell us more about it?
Traditionally, the oil and gas industry attracted people with muscles, stamina… people who could go and live for a month on a rig, do the tough work and come back. Many people learned by experience. These were the good times when there were fewer rigs, less pressure and lower expenses because of health and safety and other current constraints. So there was time for people to learn; you could learn from your mistakes. If there was an accident, you could go with the flow.
When the pressure started to grow and the demand for offshore workers grew, the result was more accidents, people being rushed through the ranks and there was no time to train people. Oil and gas companies started training people themselves but the demand was always bigger than what they were producing and today it is forecast that there will be about 100,000 vacancies in the next three or four years in the oil and gas industry to replace the older generation – because, when you are 50 or 55 on a rig, you start to lose your strength with all that stress. So you need the younger generation to replace the older ones.
There are training courses; companies are investing internally to train people, but it’s not enough. The system was built around manning agencies that provide people. We ended up – Ableman International is a manpower (human resources) agency – poaching people. In the end, everybody is pushing the same people. You hardly find anybody competent, who was good enough to propose.
So we took the initiative, instead of staying as a manning agency poaching people, to do something more. Angelique (Maggi, Paul’s daughter) went to Houston and we started talking, discussing.
In parallel, IADC (the International Association of Drilling Contractors) launched a programme, Workforce Attraction Development Initiative. IADC was partnering up with colleges in Houston to develop courses for entry level recruits. So we are not talking Masters or training people for the oil companies. It is literally for the workforce. We were riding on that wave and we came in at the right time.
It was an intuition; I don’t know what it was. It was vision. I used to tell them: if we do not set up an academy, we are going to be at a roundabout going round in circles. Our academy is not going to be a whiteboard and desk classroom. It is going to offer a ten-week, full-time, eight hours a day, practical course with tests at the end of each module. We are investing about €2.5 million in equipment; we already ordered the first batch of equipment, which are the training modules for the workshops for people to simulate situations on a rig.
There is going to be computer-based training and people must have a basic knowledge of maths and physics. It’s not about the muscle any more; you need to have brains as well – problem-solving capabilities. Because rigs are being modernised; new rigs are full of electronics. People must know how to read and communicate efficiently. They must be groomed to be aware of safety; you cannot teach safety. Safety is a culture. So this course prepares people technically; it prepares them for life on board; it prepares them for safety awareness and we have also taken the step to be part of this growth, this contribution. We wanted to move from a simple manpower agency to a player in the sector.
That is what gives us the courage, what makes us move forward. Three manpower agencies were born from our company – ex employees of our company who left and set up on their own. You rent an office with a phone and start harassing people. We wanted to move out from this circle and be contributors, putting our actions where our mouth is and also invest in it. We did not go out knocking on doors asking people to use our services.
We went there (to Houston) with conviction and a curriculum, which in our opinion was what was needed as an entry level programme. IADC told us: ‘You are right on the spot. It is our vision.’ We started negotiations and they told us: ‘You need to partner with a college in America, to fast track the process because, if you do it on your own, it will take a long time.’ They gave us the names of four or five colleges and Lone Star was top of the list. We told them we wanted Lone Star.
I went to Lone Star College. They vetted us; they came here and Angelique went there twice. We are working at full speed to launch the Academy, to be called the Ableman Drilling Careers Academy. Once the government announces the preferred bidder status on the Valletta harbour project, we will launch the academy because we want the academy to start before everything is set here so in two years’ time, when the buildings are ready, the academy will have already been well established, recognised internationally and our certificate internationally accredited. So a person with this entry level certificate can go to Brazil, the Gulf – everywhere, and it is recognised in the industry. It is not a partnership with somebody doing a course and I send you people. It is us. So we are very proud of this.One of the titles we were thinking of using for our report is “Proud to be Maltese”. And this sentence means something very different for everyone. In your opinion, what does it mean to you to be Maltese?
Being Maltese makes me proud. I got more convinced after having had the opportunity to travel abroad. Travelling abroad has strengthened my belief that I am proud to be Maltese. Our determination and resolve to invest in Malta primarily is because we are proud that we are Maltese. We have opportunities to go elsewhere but our primary interest is Malta.