The Seychelles Petroleum Company (SEYPEC) was created in 1985 to take over the responsibility of importing, marketing and distributing petroleum products in Seychelles. The government-owned company has successfully modernized the country’s distribution network and is now moving toward the goal of becoming a regional hub for fuel supplies under Chairman Dr Selwyn Gendron, who took up his post in 2017
What are the key developments in SEYPEC’s history, and where does the company find itself today?
Before 1985, the trading of fuel was in the hands of Shell Oil, so basically, all profits up to that time were expatriated, although obviously they were providing employment as well. The government took the decision to nationalize such a strategic sector. The government then developed more state-to-state relationships in order to supply itself with fuel through the national oil companies of Kuwait and Malaysia.
One of the biggest achievements of SEYPEC was that we reached an agreement with Petronas to invest in boosting our facilities so they could store more fuel here in Seychelles, which would then be re-exported to passing vessels and international airlines. There was also an expansion in local infrastructure, including a pipeline to take oil to the airport and the setting up of petrol stations in key areas. We built a modern depot on the island of Praslin from which SEYPEC is also able to supply other outlying islands with a dedicated small tanker. The tanker also operates in bunkering for international vessels and has even supplied fuel to Madagascar and Comoros in emergencies.
More recently, there has been a debate about which is the fuel of the future, and the government has decided to use liquefied natural gas (LNG), which is a cleaner and more sustainable source of energy. This is a challenge because the technology required is significant. Just an initial storage plant would cost $85 million, so at this stage, it does not make sense unless we can link it to the region. It would also mean changing the electricity generators that run on ordinary fuel, leading to a further investment of the same size. If we can work with other regional countries, such as Mozambique, which has found natural gas, then it could make sense. This is the next big challenge SEYPEC is looking at. Finally, the human resource of an all-Seychellois team is a paramount development that warrants mention.
In November, it was announced that the company paid off a $158 million loan from a German development Bank for a fleet of six oil tankers. What is the future of this fleet?
SEYPEC has had a fleet of six oil tankers since 2002, which has now been fully paid for and gives us a very strong asset base. Now the challenge is to consolidate, with some of those tankers coming up for replacement, so we need to analyze that question. It’s a market that goes up and down, so important decisions will have to be taken.
What is the potential for offshore oil and gas in Seychelles?
As far as petroleum exploration is concerned, we have proven from tar samples that there is oil. Then in exploratory drilling on the plateau, the seal has been located under which the resources lie. There is about 500 meters of reef structure above it, which makes the penetration of ultrasound and the interpretation of the data very difficult, although the technology is improving all the time. The oil is there; the questions are at what depth, and at what price it could be extracted. It is also to be noted that this sector is under a separate company, PetroSeychelles.
Do you see potential for Chinese companies to invest in the sector and collaborate with SEYPEC in any way?
I think the main area with potential for Chinese investment would be energy infrastructure, but as of yet, this is an unexplored area. We are certainly open to discussions with regard to this possibility.
This company has been instrumental in providing cleaner, lower sulfur content gasoil since 2007. How does SEYPEC work alongside governments to reach environmental and sustainability targets in terms of energy?
We work together with the government to reach the targets that are set while also taking into account the economic aspects of the sector. In the same way, any decisions on future infrastructure have to be taken together with the government, taking into account the environmental impact as well as the financial side regarding foreign exchange reserves and the risks involved.
A recent study shows that fuel prices in Seychelles are among the lowest in the Indian Ocean region. How does SEYPEC manage to control costs?
It’s a combination of several factors. The experience we have gathered in procurement tenders over the years means we get a good price from suppliers. The final price is not just dependent on the global market; there is an excise duty the government places on fuel, and then there is the margin that the company is allowed to make, which, again, is fixed through consultation with the government. The combination of these factors determines the price. Then we have benefits from the re-export market, to fishing vessels, shipping and airlines.
SEYPEC is located at the New Port in Victoria, which is undergoing a $107 million renovation, expected to be completed by 2021. How welcome a development is this?
The port needs expansion and renovation as it is not in a good state at the moment. This will allow for larger vessels to dock and will lead to tankers taking less time to unload. In that sense, the development will definitely help with efficiency, and in terms of safety too because a congested port is always a concern. But if tomorrow we move toward LNG, we need to start thinking about where we are going to discharge the gas – not necessarily at the commercial port.
Can you explain the company’s vision to become the leading oil company in the Western Indian Ocean, making Seychelles a regional and strategic hub for petroleum-related activities?
We have started on a small scale with the storage facilities we have already developed. When we import fuel, the supplier owns the fuel in the tank and we rent the space to them, so we pay for what we require. The project is to become a repository of fuel so that others in the area, such as Comoros and parts of Madagascar, can buy and it could then be dispatched from here in smaller vessels. In this vision, China could be in charge of the delivery, and we would be a redistribution hub for the region.
What do you see as your biggest challenges as leader of this vital company for the future of Seychelles?
When I look at this company, I think it has already been a very successful and well-run operation. What I think is important, though, is to constantly be reexamining the way you do things, and looking for a better way. For example, the tanker fleet has been a good business up to now, but we need to look closely at it now and wonder if it is time to change the model. It’s not about experimenting, but reevaluating. The next challenge is how to develop Seychelles as a regional hub. We should be able to achieve something on that path in the next five years. But key to this will be the choice of supply in terms of the companies we work with. You can’t achieve these goals alone; it’s a partnership – with the countries of the region, with the supplier and potential investors.