Author: George Mangion
Published on Malta Today, 28 July 2016
Malta can recommence to export the know-how and experience in engineering and sheet metal skills that have been acquired over the decades as a major ship repair yard. Nostalgically, I recall the success of an Economist conference held two years ago at The Hilton where government top brass all sung from the same hymn book, pledging an economic renaissance which befits the nation. Who could predict that since then, we registered a 6.3% increase in GDP and the lowest unemployment rate in the Eurozone.
Another milestone was the plan to save our embattled energy sector and in particular how this can be complemented by attracting private investors to tender for the creation of improved maritime facilities. Since then the derelict site in Marsa ex-shipyard was transferred to a private investor to convert it into a fully equipped maritime hub and a top class training academy.
This policy started two years ago when an international call for expressions of interest for the development of the vast site (measuring in excess of 175,000 sq metres) was issued. The maritime sector was one of the economic sectors discussed at the Economist conference, which in my opinion generated a number of thought-provoking ideas with interventions from a number of experts.
Noticeably I recall surveyor Paul Cardona as a speaker at the conference who, when asked for his opinion, was critical of past administrations due to the shortcomings and lack of planning. He did not chew his words, saying: “To make Malta a hub, as is being proposed, we need to have technical training. And instead, what have we done? In the past 10 years, we destroyed the Drydocks and the national shipping line!” His rebuke sounded like the death knell of a traditional industry.
Moving forward and trying to pick the pieces one augurs that Chris Cardona (minister responsible for the economy) succeeds to resurrect the ghost of our proud maritime heritage. Is he going to be a captain with a proverbial pair of strong hands at the tiller, able to navigate our maritime industry sailing in choppy waters? There is not a moment to lose given that our engineering facilities are almost non-existent following the agonizing closure over the past decade of a loss-making Drydocks behemoth.
Fortunately, there is a revival of a market for profitable engineering jobs in the central Mediterranean and one would expect that Malta will be proactive to rebuild its ship repair industry and regain associated engineering skills – this is vital to win increased share of the workload on oil rigs. Work on rigs can also be attracted from a range of localities, ranging from the Atlantic Ocean to West Africa, since the deviation would not be more than one week each way but work can also be shared with the massive decommissioning task which the British government pledged to carry out in depleted oil fields in the North Sea.
The UK offshore oil and gas industry is one of Britain’s most successful industrial sectors, as we all know how over the years its oil and gas production satisfied more than a third of the UK’s energy needs and attracted massive private investment worth billions of euros. North Sea production supports jobs for almost half a million people across the country whereas (before a severe drop in oil prices) Aberdeen in Scotland was fast developing a reputation as a global provider of oilfield goods and professional services.
Having visited Aberdeen three years ago, I can vouch that the city is fully geared to serve as an oil and gas hub that has a lot to teach Malta to invest in the right infrastructure for an efficient maritime oil and gas hub. This becomes more poignant if and when we do attract investors to start drilling in offshore waters, realizing at this juncture how we miss the expertise and the transfer of technology that Aberdeen city possesses. It is common knowledge that rigs and other structures are subject to heavy wear and tear due to inclement weather and rough seas and if we strike while the iron is hot there is a window of opportunity in repair work.
Malta faces no competition from other major rig repair stations in the Mediterranean. Naturally with drilling activity in places such as the Adriatic, Croatia, Egypt, the Adriatic coast, Morocco, Cyprus, Israel and Iran there will be ample opportunities for technical support services especially when the oil price stabilizes. In the past decade the maritime industry and associated businesses were not developed in tandem and one hopes that once the Marsa facilities are fully restored opportunities can be plentiful, more so when stability returns in the North African oilfields.
Apart from over-manning and uncompetitive orders taken at the ex-Drydocks – this all leads to losses and under-utilization of six fully functional docks, resulting in under capitalization of the Drydocks operation, hitherto unable to replace its aging workshop machinery. Forgetting for a moment such lean times, the port facilities in Grand Harbour saw better days. One can never underestimate how, over the centuries, the island successfully exploited its central position in the Med as a trading post for cross border trade – with regular shipping of merchandise to other European ports.
Since Independence new harbour facilities were added, such as the Freeport, bunkering facilities, maritime school and super yacht repair facilities but more remains to be done, such as development and maintenance of more sheltered marinas – including quays, berths, piers and necessary amenities and supporting services. A revamped repair industry is crying out to service vessel chandelling, modification, conversion and maintenance of super yachts, sub-sea systems and other support vessels to the oil and gas industry.
Drydocks World is reported to have signed a contract with Malta Oil and Gas Limited (MOG) for the construction of two new jack-up drilling rigs. It is interesting that such rigs come fully functionally and can accommodate 150 workers at one time, complete with a safe deck for parking an S61N or S92 helicopter. The once derelict ex-Marsa shipbuilding yard when fully functional can smarten up and cut to the chase to execute state of the art engineering orders. Quoting the chairman of Drydocks World, he claims that “the upstream oil and gas sector is evolving at a rapid pace to create robust demand for new offshore drilling rigs”.
One cannot but admire Medserv director Anthony Duncan who remarked that Malta could well become a “mini North Sea” if all the oil and gas activity being planned in the Mediterranean takes off. Not forgetting that with the massive decommissioning works at the North Sea one can hope that Malta will be able to win part of the job orders that will be created.
Over the next 30 years, this market is estimated at £30-£35 billion, and once we retool and set up state of the art engineering facilities Malta can recommence to export the knowhow and experience in engineering and sheet metal skills that have been acquired over the decades as a major ship repair yard. It is an opportunity which cannot be ignored if we hope not to miss our share from the list of decommissioning projects in the North Sea and timing fits perfectly within the vision of the government to resurrect the maritime sector.
When the €55 million investment in Marsa maritime hub starts functioning we can also provide support services to oil and gas activity in Libya, Tunisia, Egypt, Croatia, and the Adriatic coast. The possibilities for growth are palpable and long-term macroeconomics can be secured once the government succeeds in attracting international students to patronize our engineering academies. This vision can be a resurrection of an industry so crucial to atone the ghosts of our maritime ancestry.