Siemens yesterday launched an ambitious plan to consolidate its presence in the oil and gas industry in the GCC region with the launch of a specialist regional business centre (RBC) for the sector.
The RBC focuses on bringing together Siemens’ wide expertise in the oil and gas industry for the GCC and Iran region. According to Sunil Mehra, head of the centre, Siemens is the only provider of the complete range of rotating and electrical equipment for the fast expanding market sector. Globally, this one market sector alone accounts for a revenue of EUR 2 billion for Siemens worldwide (based on fiscal 2005 figures).
The new thrust into the market comes as market statistics highlight that global crude oil production will need to be raised by 25 per cent over the next decade (source: CERA- Cambridge Energy Resource Association). Meanwhile, it is estimated that natural gas production will need to grow by 200 per cent to cope with the increased global economic development over the next 50 years.
All of which translates to a massive investment of an estimated USD 3,000 billion by 2030 in just the gas sector alone (source: IEA – International Energy Agency), to open new gas fields and for the renewal and development of gas transport infrastructure.
Here in the region, Mehra sees an average annual investment of USD 25 billion in the industry. That figure is expected to grow by a conservative 3 to 5 per cent annually. A significant portion of that investment goes into improving the existing infrastructure, says Mehra, citing Siemens’ strengths in the sector.
“Siemens is the only organisation that can provide the complete portfolio from compression and pumping motors and turbines, to power generation and distribution systems, all the way to water management, automation and instrumentation systems for the business,” says Mehra. “Quite simply, there is no one else who can provide what we do!”
That claim is based on the diversity of the Siemens global enterprise. Its strengths in the power generation and distribution business provides a major foundation for the electrical part of the business. Combined with the expansive scope of its automation and industrial solutions business, the organisation’s interests in the oil and gas business are backed by a portfolio that is generally considered as difficult to match.
“This region is the very heart of the oil and gas industry,” emphasises Peter Fuchs, CEO of Siemens LLC. “It is hardly surprising that with increased global demand for the expanded production and high technology, we should also increase our focus on providing such solutions right here on the ground in the region.”
According to Fuchs, the oil and gas industry will continue to lead the economic basis for the region for the near to mid-term future. This is testified by the massive growth plans of the GCC countries alone; a large portion of which is financed by the higher energy prices globally. The knock-on effect of such growth is an increased demand for better technology to generate higher production – and of better quality- from existing sources.
“High technology plays a critical role in increasing production and quality,” says Mehra. “Both water management and automation and control systems play a major role in ensuring that the source fields are successfully exploited and that the quality of extraction and fracturing is maintained at a high level.”
While the new RBC is expected to provide an additional impetus to Siemens’ focus on the business, it is also expected to strongly leverage the current position of the organisation in its individual business groups. Siemens is already the largest player in the regional power sector, while the automation and industrial solutions business account for a significant percentage of the company’s business here.
The RBC’s location in Abu Dhabi also allows Siemens to respond rapidly to the needs of regional clients; a marked difference from flying in experts on an ad-hoc basis. It also expands on the 2,000 plus strong team of Siemens employees in the Gulf region.
Mehra cites the potential for a co-ordinated global approach to developing partnerships with the industry. He cites two of the most pressing issues facing the industry as a crunch in sourcing skilled manpower, and the choking of production facilities for critical equipment. Both of which he claims, can at least be mitigated to a large degree by working with partners.
Siemens’ own annual research and development budget crosses EUR 5 billion, on average. That kind of research, says Mehra, provides great possibilities for the oil and gas industry to leverage the potential of technological innovation developed for their specific situations. These include upstream, downstream and mid-stream applications and solutions.
“One of our major interests is in working with our clients as partners, rather than just as suppliers,” he says. “Ideally, we would like to create custom-made solutions for each client. With the kind of volumes we are talking about here; customisation is not just economically possible, but a necessity to ensure that each client uses technology and skilled human resources to its optimum.”