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EXPANDING
OUR FOOTPRINT

In MEA Svitzer pursues multiple approaches to entering into new countries and new markets.

The MEA region is a geographically large and culturally diverse area, with Svitzer operations spread throughout the Middle East and Africa, as well as the Indian subcontinent and Sri Lanka. Recent major successes in the area include a new contract for five vessels with Petroleum Development Oman (PDO) and contract extensions in Egypt and Qatar. That said, the MEA region – like the rest of Svitzer – faces an uncertain global economy. The biggest challenge throughout MEA thus far in 2015 has been the impact of lower oil prices on our main customers, the majority of whom are oil and gas companies. The first half of the year was spent renegotiating terms on all long-term contracts, as these customers have been looking for significant savings.However, as our cost base  is fixed, we have not been able to offer direct reductions. We have instead worked with our customers to identify and implement mutual cost savings to the benefit of both parties. 

But according to Michael Koefoed, Regional CFO, the major long-term challenge is “to expand our footprint across the region. The most important thing for us is to grow and establish a presence in new countries. With the oil- and gas-related pipeline having dried up for now, the focus is to enter harbour towage markets, primarily in West Africa and Saudi Arabia, and public-private partnerships in countries where port infrastructure is owned by the public sector.”

LONG-TERM LOCAL PARTNERS
One of the biggest obstacles to doing so is regulatory restrictions, which vary from country to country. Most ports in the region are protected by legal entry barriers. In general, Svitzer MEA looks for longterm local partners who can help us understand the local market and establish an entrance platform. Our approach is to appoint a country representative and in some cases even set up a company before we have secured business. We have followed this approach in Saudi Arabia and Malaysia, where we have identified
strong local partners and agreed on the main principles for how we will work together in pursuit of new business. InAfrica, Svitzer is seeking a foothold in Nigeria, which has the continent’s biggest towage market but also one of the most restrictive, requiring that the company itself is Nigeria owned and that vessels are Nigerian flagged. We have hired a senior manager from Maersk to drive business development and are making use of Maersk’s many years of in-country experience. The first tug, the SUPREME
ENDEAVOUR, arrived in Nigeria this spring, and the immediate outlook for deployment is positive. 

TRAINING AND SAFETY
In addition to ownership restrictions, some countries also have localisation requirements, which means that Svitzer mustemploy local personnel on-board and on-shore within a certain time frame. This can be a significant challenge in countries without strong maritime traditions and requires significant training efforts. Svitzer MEA has already established a strong track record with training programmes in Angola and Oman, and was given a Lloyd’s Sea Trade Award for the training programme carried out in Angola. Svitzer will continue to focus on training and has recently invested in simulator capacity in Dubai and employed a training master who will travel to operation sites and carry out on-board training. 

This training expertise helps differentiate Svitzer from competitors and has alsoproven more broadly useful, as, for example, when an Egyptian-trained crew has been used to help train crews in other operations outside Egypt. Svitzer MEA is also differentiated from the competition by our commitment to safety and our decision to implement OVMSA standards, which is particularly important to the oil majors. The capability to train and develop local crew, a strong safety focus and the ability to customise company structures and solutions to form strong local partnerships are competencies that set Svitzer apart from the competition in the MEA region. 

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