CONTRACTORS

Abu Dhabi 2019 | ENERGY | B2B

The energy industry's shift to downstream will create new opportunities for EPC contractors, resulting in more investment and a significant increase in workload.

WALID HATOUM
CEO
Arabian Industries
JOSE CARLOS GIL
Executive Director
Intecsa Industrial

What does the focus on the downstream segment and budget reallocation toward gas mean for the industry?

WALID HATOUM In recent years, the energy sector has witnessed a transition from a traditional business model driven by supply, demand, and price fluctuations to a far more complex and multi-dimensional business model impacted by new technologies, climate change, and sustainability. Change in the oil and gas sector is certain; it is risky to assume business as usual, do nothing, and only react to market changes. Many oil companies are slowly re-allocating their emphasis from oil to gas: this move is not only driven by gas prices but by government policies and the push for renewable and clean energy. Our strategy has been to anticipate market change and to plan ahead and quickly adapt to new market realities. For example, the construction of a state-of-the-art fabrication facility in the UAE was in anticipation of local market changes. At the GCC level more recently, we have witnessed the implementation of a more focused approach driven by the impact of adopted in-country value (ICV) programs and policies.

What have been your biggest achievements and projects in 2017?

JOSE CARLOS GIL The biggest achievement was the mechanical completion of the naturally occurring radioactive material (NORM) handling facilities. The NORM handling project is one of a kind because there are not as many comprehensive facilities worldwide. It will deal with the materials that arise during operations of drilling and handling of crude oil by ADNOC. The main material is radium, which disintegrates into other radioactive materials and emits alpha and beta radiations. Those materials have to be handled safely, or else they can harm the environment. This plant deals with materials that have been identified as radioactive, and are sent to the plant and cleaned. The waste that is identified as radioactive is disposed into a regulated nuclear waste landfill close to the plant. The materials come from Emirati refining companies. ADNOC is one of the few companies worldwide willing to deal with this problem. It is a pioneering project in the industrial sector, which means we had to face many operational and engineering challenges.

How can an engineering, procurement, and construction (EPC) contractor navigate the current wave of changes affecting the oil and gas industry?

WH In order to remain competitive, Arabian Industries is continuously re-evaluating our business model. Four years ago, Arabian Industries took the necessary steps to restructure operations into four distinct companies each focused on a specific services delivery including maintenance (AITS), engineering technology (AIES), manufacturing (AIM), and EPC (AIP). The company took further steps to decentralize its operations by creating standalone organizations focused on local markets in Oman, the UAE, Bahrain, Kuwait, and Iraq. In the UAE, we have had a continuous presence since 2010 and have completed a number of key EPC projects. In December 2017, Arabian Industries inaugurated its fifth manufacturing facility, located in ICAD-II, Abu Dhabi. Last but not least, we seek to diversify our portfolio to focus on innovative and new technologies.

JCG We bid on projects regardless of their size. We have around 2 million man-hours of engineering capabilities, which are enough resources to cope with mostly all the projects in the area, both in Abu Dhabi and the GCC. Our engineering and procurement operations are based in Madrid. We are project- oriented: we develop projects in country and develop our task force of engineers for the construction phase. This is the strategy for EPC contractors. We are a 52-year-old engineering company, and most of our added value comes from engineering, which leads to procurement, which together make up 30-40% of the project. In construction, we are an EPC-oriented company and know how to build and facilitate key projects. We also have to rely on the subcontracting base in each country, which can be an advantage or a disadvantage. Lately in Abu Dhabi, things have deteriorated because of the lack of projects and management within local companies. In other markets, we have sister companies as Intecsa is part of ACS, the largest international engineering and construction group worldwide.