How does Bilfinger Tebodin's priorities reflect the trends the region is witnessing under an industrial and energy management point of view?
The dynamics around us define and refine our priorities. The Middle East is transforming away from a traditional pure-hydrocarbons-based industry and using that natural wealth to diversify and build a future of efficiency and sustainability. Bilfinger is well positioned within these plans. Our century-long focus and expertise in both the worlds of CAPEX and OPEX give us the privilege to serve our clients along the entire value chain and support their efforts not only to build things better, but also to run and manage them more efficiently and sustainably. On the CAPEX side, we begin with an idea all the way to detailed value engineering and then onto the project to ensure that the money being spent results in the highest return of capital. On the other hand, the amount of money spent to maintain and sustain the industry is significant, and that is the OPEX cycle, where Bilfinger comes in with a century-long expertise in enhancing efficiency, increasing productivity whether per molecule, per ton of production or even per MW produced, extracting and creating more value from every barrel. To extract value from every barrel, one needs to have the holistic view starting with what you build (capital allocation), how you build (CAPEX optimization), and how efficiently and sustainably you operate those assets (OPEX).
How do you project the recent asset allocation toward natural gas impacting the hydrocarbon industry, and where do you see the greatest potential on the digital front?
The natural gas industry, and on the back of it the petrochemical and power sectors in the Middle East, have come far and relatively rapidly. However, available capacity came under pressure to the extent that allocations for petrochemical production growth became a stretch. New exploration, marginal fields, sour and ultra-sour, and even unconventional assets all came into focus, albeit at a higher production cost; however, there is an internal source of productivity and additional capacity that is not fully explored. That is what we call gas liberation. On the digital front, the energy and hydrocarbon industry have not really tapped into enormous possibilities here. The role of digital transformation starts in better designs and more efficient processes, but stretches on far beyond into the world of data; not just to acquire data but to structure and capitalize on it. That is where we at Bilfinger come in with our BCAP to help customer move from reactive maintenance, transition through predictive, and get to what we call prescriptive. This is where you squeeze the dollar from every barrel, molecule, or mega-watt.
What would you define as the biggest challenge of the oil and gas industry in the region?
For Middle East producers, blessed by the low lifting cost, the game is all around the cost of availability, reliability, and maintenance. This is where the equation is heavily stretched. As long as the oil price is around USD70-75, shale producers have a healthy cash flow and solid margins to service their debt and continue to drill. The same holds true for Middle East producers, even though the elements are somewhat different. At this oil price, the net margins are healthy, allowing the social cost and economic spending to continue at the right pace. The challenge comes when the needle drops to around USD40-50. That is where the social priorities prevail, growth for CAPEX freezes, and the entire ecosystem suffers. This familiar and somewhat cyclical scenario suggests continuous focus on cost reduction, efficiency, and productivity is more than prudent. 1% more efficiency, 1% more productivity, or 1% less OPEX translates into millions of dollars freed cash flow that could be reinvested in much more accredited projects. That is where one begins to appreciate the impact of true digital transformation.