$139bn bonanza in pipeline for oil services providers in Middle East

Oil support giants said the international recovery meant customers were moving forward with large projects and increasing exploration for future developments. (Shutterstock)
Updated 07 September 2018
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$139bn bonanza in pipeline for oil services providers in Middle East

  • Revival in the price of crude means Middle Eastern producers are spending again — good news for service providers
  • Flurry of deals during the summer has bolstered market sentiment and investment

LONDON: GCC and global oil services and equipment providers are cashing in on an upswing in capital spending in Middle Eastern oil and gas-producing countries, senior executives have told Arab News.
There has been a flurry of deals during the summer, bolstering market sentiment and investment, they said.
Steve Connolly, regional managing director for Altrad in the MENA region, said that the group’s pipeline of potential new business was “probably 25 percent higher than this time last year.”
Infrastructure and expansion projects linked to existing or new wells and refineries were mothballed during the oil price slump, but the cycle has turned, said executives.
Duncan Anderson, CEO at Abu Dhabi-based Gulf Marine Services, said: “Countries that were restricting their production are now accelerating it. Saudi Arabia is producing (more oil) per day and that all needs the support of oil services. It’s a similar story in Kuwait, the UAE and Iraq.”
The executives said that as the oil price picks up, there is generally a time lag of about 12 months before a more robust trading environment transfers to the order book, but that moment was now.
“We have a secured orders backlog of over $120 million and are confident that will increase significantly as we move forward,” said Anderson.
Altrad’s showcase Middle Eastern project links to a deal with Saudi Aramco’s construction of the huge Jazan Economic City that lies on the south coast of the Red Sea. The development, creating thousands of new jobs and involving new refineries and terminals has seen Altrad secure work linked to both construction and maintenance post-construction. “It’s a great endorsement from Aramco,”
said Connolly.

 

Elsewhere, Weir Oil and Gas Dubai signed $50 million multi-year contracts in Iraq with two international oil companies at the end of August, further cementing its position in the region.
Petrofac clinched deals this summer highlighting a healthy forward order book. It won a
$600 million contract with Algeria’s Sonatrach to help further development of the Tinhert gas fields in the southeast of the country. It also signed a $369 million Iraqi contract with state-run Basra oil company to help build a new crude-processing facility in the Majnoon oilfield that will have the capacity to produce 200,000 barrels per day.
In an emailed response to Arab News, Petrofac CEO Ayman Asfari said he expected an increased focus on downstream and petrochemical projects in the Middle East, and forecast that the company would bid for about $8 billion of “petrochem” projects in the region over the next three years.
“There is a wave of downstream spend both on refining and petrochem developments as MENA economies continue to industrialize,” he said.
Middle Eastern clients were also spending on upstream oil opportunities to offset natural decline and to maintain spare capacity. There was also a “very big push to develop gas resources, particularly in the UAE and Saudi Arabia, which are short of gas, with Saudi planning to double gas production capacity by 2030,” said Asfari.
Jordan’s Cabinet recently approved a pipeline to supply oil and gas from Basra in southern Iraq to the kingdom’s Aqaba port, as Baghdad seeks alternative routes to bring its crude to market.
Spencer Walsh, senior analyst at IHS Markit, told Arab News that the oil market had tightened and that countries which were restricting production were now ramping up.
“As that happens, countries such as Kuwait, Iraq and UAE need the support of oil services and equipment groups, but by far the biggest market for actors was KSA where investment is strong,” he said.
UAE-based oil rig construction and maintenance firm Lamprell is ramping up work at the state-of-the art King Salman Global Maritime Industries Complex, a shipyard in KSA’s Ras Al-Khair which, on completion, will be the largest shipyard in the Arabian Gulf. The nearly 12 million square meter facility will build offshore oil and gas rigs, offshore support vessels and commercial vessels, including very large crude carriers. Lamprell is part of an Aramco-spearheaded consortium whose other members include the National Shipping Company of Saudi Arabia (Bahri), and South Korea’s Hyundai Heavy Industries.
The chief executives of US oil support giants Schlumberger and Baker Hughes said customers were moving forward with large projects and even preparing to increase exploration for future ones, the Wall Street Journal reported last month.
“The international recovery has finally started,” Schlumberger CEO Paal Kibsgaard said during the company’s earnings call with analysts. WSJ cited him as saying that “the backlog on integrated drilling projects is the most we’ve ever seen.”
The global oil field services market is expected to be valued at $139 billion by 2025, according to a report last year by US consultancy Grand View Research. The compound annual growth rate was put at 3.4 percent.

FASTFACTS

The global oil field services market is expected to be worth $139 billion by 2025, according to a report by US consultancy Grand View Research.


Renault keeps Ghosn as CEO despite arrest in Japan

Updated 21 November 2018
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Renault keeps Ghosn as CEO despite arrest in Japan

  • Renault’s board said its decision was made with an eye toward keeping the company on a steady course
  • Renault and Nissan have a partnership with smaller automaker Mitsubishi Motor Corp

TOKYO: France’s Renault says it has decided to keep its CEO Carlos Ghosn on despite his arrest in Japan on allegations that he misused assets of partner Nissan Motor Co. and misreported his income.
Renault’s board of directors announced late Tuesday that the No. 2 at the company, Chief Operating Officer Thierry Bollore, would temporarily fill in for Ghosn.
“Mr. Ghosn, temporarily incapacitated, remains chairman and chief executive officer,” a statement from Renault’s board said. But while Ghosn deals with his legal issues in Japan, Bollore will have the same authority to run the company as the CEO, it added.
Renault’s board said its decision was made with an eye toward keeping the company on a steady course “to preserve the interests of the group and the continuity of its operations.”
Ghosn runs Renault, Nissan and the Renault-Nissan-Mitsubishi alliance that he helped turn into the world’s biggest car-seller last year, and both France and Japan want to keep it intact.
Renault’s move to appoint a temporary leader was in line with a demand by the French government, which owns a 15 percent stake in the automaker. Finance Minister Bruno Le Maire had said earlier Tuesday that Ghosn was not in position to lead the Renault Group while fighting the accusations in Japan.
The French automaker said after an emergency meeting of its board of directors in Paris that it would further consolidate its alliance with Nissan. The two automakers have a partnership, also, with smaller automaker Mitsubishi Motor Corp.
Asked about reports that Nissan and Renault had been on the verge of merging, Nissan’s CEO Hiroto Saikawa told reporters Wednesday that he had not heard of such a plan.
There was no update Wednesday in Tokyo from prosecutors on Ghosn’s case, and no public word from Ghosn himself. It was unclear where he was being held following his arrest on Monday.
Nissan’s board of directors is due to meet Thursday and expected to approve a proposal to dismiss both Ghosn as its chairman and another executive, representative director Greg Kelly, who is alleged to have collaborated with his boss in falsifying financial reports.
Earlier this year, Ghosn signed a contract that would have run through 2022.
Renault’s board, meanwhile, said it is requesting that Nissan pass along details of its investigation into Ghosn’s alleged wrongdoing. Le Maire said authorities have examined Ghosn’s tax situation in France but have found no wrongdoing.
Japanese prosecutors said they were holding Ghosn, 64, for allegedly collaborating to falsify securities statements and underreporting $44.6 million in income from 2011 to 2015.
Bollore, a member of Renault’s executive committee, joined Renault in September 2012 and was named chief operating officer only last February. He has a long career with both tiremaker Michelin and auto parts company Faurecia, spending time in Asia with each.
Of French, Brazilian and Lebanese background, Ghosn is a towering corporate figure in France, where Renault is one of the heavyweight industrial survivors.
He is more controversial in Japan, where top foreign executives are rare and even the biggest corporate bigwigs tend to keep a low profile.
Ghosn is admired for driving a turnaround at Nissan when it was near bankruptcy and for his foresight in pushing to bring electric and autonomous cars to the masses.
But in a 90-minute news conference late Monday night, Saikawa, the Nissan CEO, said his boss had too much power and the company was overdue for some change.